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Contents

Introduction

Economic Review and Outlook

Income Tax

VAT

Customs and Excise

Miscellaneous

Budget Highlights - Kenya

Budget Highlights - Tanzania

Budget Highlights - Rwanda & Burundi

Budget Highlights - Burundi

Budget Highlights - East Africa Community

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IntroductionUganda

The Budget theme for the FY

2012/2013 is Prioritiesfor Renewed

Economic Growth and

Developmentand onecan confidently say that it is

a reaction to the extreme

turbulence recently

experienced in the economy.

Nonetheless, the budget

continues to expedite the

core investment projectsidentified in the National

Development Plan.

It aims to moderate fiscalconsolidation whileincreasing spending oninfrastructure and otherdevelopment priorities.

The Minister of Finance,Planning and EconomicDevelopment has stressed

that the restorationand maintenance ofmacroeconomicstability requires thatthe current tight fiscalstance is continued inFY2012/13, butwithout underminingthe implementation ofthe national

development planespecially in the area

of boosting public

investment in theenergy and transportsector.

In this regard, Governmenthas adopted a PublicPrivate Partnership (PPP)policy to increase privateinvestment and participationin the provision of publicinfrastructure; whileundertaking to improve the

efficiency of publicexpenditure.

The funding gap highlightedin the budget necessitatesthe consideration of allfunding mechanisms withthe result that tax policymeasures aimed atincreasing tax revenue andexpanding the narrow taxbase have been introducedwith the aim of improving

revenue and budgetperformance over themedium term.

While external borrowing fordevelopment is expected toincrease in the years ahead,debt sustainability analysiscarried out jointly by the IMFand the World Bankestablished that Ugandacontinues to face a low riskof debt distress

Overall, however,economic growthis expected tocontinue improvingand is projected toreach 6% by2013/2014 fromcurrent growth of3.2%.

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EconomicUganda

From a Regional

perspective, Sub-SaharanAfrica grew by 5% in 2011and countries in the EastAfrican Community (EAC)continued to record strongeconomic growth despite thweaker global economicenvironment.

Significant progress hasbeen achieved in socio-economic welfare with 23million Ugandans reportedl

out of absolute poverty and10 million classified asmiddle class, according tothe recent Poverty Statusreport 2012.

However, Uganda'seconomic growth has slowethis year as a result of thecombined effect of tightenefiscal and monetary policieson the one hand, and theeffects of the general global

slowdown experienced byher key trading partnerssuch as the Eurozone whichis in recession and isexpected to have relativelyweak growth this year, thuscausing a negative impacton Ugandas economy.

The Bank of Ugandamonetary tightening policyinitiated in July 2011 inresponse to rising inflation

has helped reverse theacceleration in inflation by

Review

e

,

reducing demand and price

pressures in the economy.Consequently, high interestrates supported by tighterfiscal policy havestrengthened the Ugandancurrency and raisedreserve levels, while privatesector credit growth andoverall demand pressureshave considerably reduced.

A decline in inflation has

permitted a phased andgradual relaxation of themonetary policy stance andeconomic growth coupledwith credit growth shouldrecover significantly in thecoming year. Notably,investor interest in theeconomy continues to belifted by the discovery of oiland it is anticipated that thisoil should potentially propelthe countrys annual GDP

growth rates to double digitsonce production starts in thenear future.

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Outline Summary

Review of the performanceof the economy anddifferent sectors duringFinancial Year 2011/12 issummarised below:

Gross DomesticProduct

The Uganda economy facedboth internal and externalshocks which significantlyslowed down economicgrowth to 3.2% in the FY2011/12, compared to agrowth of 6.7% achieved inthe previous year.

This disappointingperformance is the result ofa remarkably volatile year,which included high global

oil and commodity prices,drought in parts of thecountry and the widerregion, power shortages,exchange rate volatility andweak external demand.

Against the backdrop of apopulation growth rate of3.5% per annum, challengeson the supply side of theeconomy must beaddressed.

Agriculture,Forestry andFishing

The agricultural sectorrebounded through the cashcrops subsector and grew by3.0% in the FY 2011/2012.Coffee, cotton, tea, cocoa,tobacco, sugarcane andexported horticultureaccounted for 9% ofagricultural value added;while food crops whichaccounts for over half of theagricultural, forestry andfishing sector is estimated tohave increased by 1%. Thefishing subsector accountedfor 3.1% of GDP, a growth ofabout 2%.

Industry

A sharp reduction in the

growth of construction, anda negative growth in theformal manufacturing sectorresulted in a growthslowdown from 7.9% inFY2010/11 to an estimated1.1% in FY2011/12. Publicconstruction fell due to thetight fiscal conditions, whileprivate activity in the sectorslowed due to theunfavourable economicenvironment. Total

manufacturing activity

declined by 1.8% from a

growth of 8% in FY2010/11.

Services

Services sector growth whichhas accounted for Ugandasrecent impressive economicrecord slowed from 8.4 to3.1% because of financialservices and the wholesaleand retail trade whichexperienced contractions.Good performance washowever realised from thetelecommunications andhospitality services whichgrew by 8.9% and 20.6%respectively.

External sector

World output deceleratedfrom 5.3% in 2010 to 3.9%

in 2011as a result of slowergrowth of economic activityin the advanced economiesthus leading to reducedgrowth from 7.5% in 2010to 6.2% in 2011. Althoughoverall global growth isexpected to remain constantin 2012 and 2013,developments are projectedto be more differentiatedacross regions withemerging economies likely

to continue suffering fromweak international demandwhich will dampen exports;

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although by some estimates,

global trade has beenpicking up during the firstquarter of 2012.

Monetary sector

In July 2011, Ugandasmonetary policy frameworkwas reformed to meet thechallenges of andopportunities formacroeconomicmanagement through atransition to an InflationTargeting Lite monetarypolicy framework where theBank of Uganda sets aninterbank interest rate - theCentral Bank Rate (CBR), asthe operating target ofmonetary policy for a givenmonth to reflect the trend ininflation. As intended, thechanges to the CBR havebeen reflected in changes tocommercial bank lendinginterest rates thus havingthe desired effect.

Depreciation of the shillingwas a consequence of thewidening balance of trade asimports continued to growmuch faster than exports.Export of goods and servicesduring the year totalled US$4.1 billion, compared toimports of goods which

amounted to US$ 5.31billion. Payments forservices were US$ 2.23

billion. However, the overall

balance of payments waspositive on account ofincreased inflows ofremittances amounting toUS$ 2 billion, foreign directinvestments amounting US$834 million, and portfolioflows amounting to US$ 274million.

Inflation andInterest Rates

Annual inflation peaked at30.5% in October 2011 buthad declined to 18.6% inMay 2012. Food cropinflation that was 42.2% inMay 2011 decreased to 8%in May 2012. This wasachieved through a tightmonetary policy using theCentral Bank Rate that ledto a rise in interest rates.

Tax RevenuePerformance

The provisional net URArevenue outturn forFY2011/12 was Shs.6,019.4 billion, against atarget of Shs. 6,169.2billion, representing ashortfall of Shs 149.7billion.

However, compared to therevenue collection for

FY2010/11, the projected

revenue for FY2011/12 hasgrown by 18% in nominalterms; and reflects revenuecollection of 12.3% of GDPcompared to 13.1% inFY2010/11.

This is a decrease in taxrevenue collection of 0.8%and is attributable to the lowreal growth in sectors suchas manufacturing and tradeservices which are important

sources of tax revenue.

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EconomicOutlook

In Sub-Saharan Africa,economic growth is expectedto pick up slightly in 2012from 5.1% to 5.3%,reflecting the regionsrelative insulation fromfinancial spill-overs fromadvanced economies and a

reduction in the regionstrade exposure to Europe.This however is subject tothe deepening of the crisis inthe Eurozone which wouldcause a substantialdownturn in Sub-Saharanfrontier markets such asKenya and Uganda.

In 2012, the Ugandaneconomy is expected tosuffer from higher

macroeconomic instabilitybut the IMF projects growth,supported by new naturalresource production andcommitment to publicinfrastructure investment, topick up in the medium term.

In the year to December2011, inflation rose by 16percentage points but therapid response ofGovernment in tightening

both monetary and fiscalpolicy should see inflation

reduce to single digits by

2013.

Potential Sourcesof Vulnerability

1) Agricultural supplyshocks driven bydomestic supply shocksresulting from changingclimatic conditions.Government isaddressing this

challenge by scaling upinvestment in irrigationinfrastructure, improvingaccess to post-harveststorage facilities andexpanding socialprotection for the mostvulnerable households.Access to finance forprogressive farmers hasalso been boostedthrough the AgriculturalCredit Facility.

2) Exchange rate volatilityremains a threat tomacroeconomicstability. The recentvolatility in the exchangerate is attributed to thelarge current accountdeficit. Reducingvulnerability of theshilling thereforerequires increasedinvestment in exportdiversification and otherareas which generate

foreign exchange as wellas long term capitalinflows. Governmenttherefore needs toattract more stable andbeneficial forms ofcapital inflows, such asforeign direct investmentand long-terminfrastructure bonds.

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BUDGET STRATEGIESAND PRIORITIESFY 2012/2013

The total resource envelopefor the FY 2012/13 isestimated at Shs11,157billion.

Domestically mobilisedresources, including taxcollections and domestic

borrowing is expected tofinance about 75% of thebudget, whilst 25% will beprovided by developmentpartners. Revenuecollections for the FY2012/2013 are projected atShs7,251 billion.

The budget strategy forFY2012/13 focuses on:

i) Promoting support to thecritical productivesectors of the economyincluding agriculture,industry and tourism inorder to generateemployment and increaseproduction.

ii) Removing infrastructureconstraints in transportand energy to facilitateprivate sector

development as theengine of growth;

iii)Improving the quality ofsocial services byfocusing on education,health and access towater; and

iv)Strengthening PublicSector Management forefficient service delivery.

Government has accordinglyset its macroeconomicobjectives as follows:

i) Achieve a growth rate ofat least 7% per annumin the medium term;

ii) Return to single digitinflation rates;

iii) Improve UgandasBalance of Payments byreducing the currentaccount deficit.

BUDGET ALLOCATIONS

FY 2012/20131) Works and Transport

Sector allocatedshs.1,651 billion fromshs.1,291 billion in FY2011/2012. This is torehabilitate and expandthe road network, anddevelop alternativeaccess routes to the sea.

2) Agriculture Sectorallocated directly andindirectly, shs.585.3billion to ensure food

security, provide raw

materials and enhanceexport revenue.

3) Education Sector whichhas the largest share ofthe national budget at17% of the total budgethas been allocatedshs.1,669 billion, fromshs.1,418 billion in FY2011/2012. Shs. 290billion has beenallocated to salary

increases for teachers,scientists and other civilservants.

4) The Youth VentureCapital Fund has beenallocated an additionalshs.3.25 billion on theshs.25 billion providedin the FY 2011/2012.

5) A Graduate VentureCapital Fund has beenestablished andallocated shs.16 billionto address the needs ofgraduates who havebankable projectproposals but lack therequisite funding.

6) Total allocation to theWater Sector hasincreased from shs.271billion in FY 2011/2012

to shs.355 billion. Thisis mainly to providewater for production.

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Income TaxUganda

The Minister has proposed anumber of tax measuresaimed at increasing revenuegeneration and reformingthe tax laws. Notable amongthe proposed changes is theincrease in the PAYEthreshold which has beenlong overdue, consideringthat the current rates andincome bands were set overtwo decades ago.

This should come as a reliefto the many salariedemployees who have beensuffering the burden of thetax against a backdrop of ahigh cost of living andrunaway inflation.

Major proposals for taxamendments to the IncomeTax Act include following:

1) Increase in withholdingtax on income derived fromTreasury Bills and Bondsfrom 15% to 20% as a finaltax. This is projected togenerate shs.16.3 billion.

2) Increase in PAYEthreshold from Shs.130,000to Shs.235,000 per month.Details of the tax bands willbe contained in theAmendment Bill 2012. The

revenue loss from thismeasure should be quite

considerable but this should

be compensated by othermeasures.

3) Imposition of anadditional 10% tax onindividuals with chargeableincome of Shs.120 millionand above, per year.

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Value AdUganda

The proposed amendments

to the VAT Act are measureaimed at reinstating

provisions that had been

made in the FY 2011/2012

but rejected by the

legislative arm of

government. These

provisions included the

exemption of biodegradable

packaging materials and

exempting of water.

The proposed amendmentsinclude the following:

1) Standard rating VAT onsupply of water at 18%.This reinstatementshould generateshs.21.7 billion.

2) Standard rating supplyof biodegradable

packaging materials.The proposal is aimed aenabling suppliers ofthese materials to claiminput VAT related to theraw materials importedfor the manufacture ofthe packaging materials

3) Exempting VAT ongambling and lotteryservices. Theintroduction of VAT on

the supply of betting,lotteries and games ofchance in the FY

ed Tax

t

.

2011/2012 encountered

a number of challengesin implementation bythe tax administration.

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CustomsUganda

Excise Duty

1) Increasing excise Dutyon spirits made fromlocal raw materials fro45% to 60%.

2) Introducing a specificrate and an ad valoremduty rate on un-denatured spirits ofShs.2, 000 per litre or80 per cent,respectively, whichever

is higher.

3) Imposing Excise Duty ocosmetics and perfumeat a rate of 10%;

Customs duty

1) Reduction of import duton Set Top Boxes foranalogue digital andterrestrial transmission

from 25% to 0% for aperiod of 1 year. This isto facilitate smoothtransition from analoguto digital terrestrialtransmission.

2) Reduction of import duton food supplementsand mineral premix usein fortification from 25to 0%.

3) Reduction of import duton Vacuum packingbags from 25% to 10%

Excise

y

y

d

y

for to ease packaging by

the manufacturers easepackaging by themanufacturers.

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MiscellanUganda

Gaming TaxProposals

Gaming and Pool Betting tarate increased from 15% to20%. This measure isprojected to generateshs.4.3 billion

Non-Tax Revenues

Various fees and charges fothe provision of Governmenservices, authorisations andpermits have been increaseto make the chargescommensurate with the cosof rendering the services.This measure is estimatedto generate shs.31.7 billion.

Review of taxlegislations

The following laws will bereviewed and the billsintroduced to Parliament:

1. Excise Duty law2. Stamps Act3. Lotteries Act4. Gaming and Pool

Betting Act

5. Tax Procedures Code

ous

x

r

.

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Budget HighlightsKenya

Introduction:

The Kenyan budget for the2012/2013 fiscal year was readby Minister for Finance, Hon.Robinson Njeru Githae onThursday, 14th, June 2012 andhas for the second year runningsurpassed a trillion KenyanShillings mark. The budget ofKES 1.46 Trillion denotes anincrease of 26% compared tothe preceding fiscal year2011/2012 which stood at KES

1.155 Trillon.

The theme of this years Budgetis Deepening our Economic &Social Prosperity within aSystem of DevolvedGovernment.

Despite various Domestic andGlobal challenges affecting theKenyan Economy which havebeen identified as ClimateChange, volatility in

International Oil and otherCommodity prices, GlobalEconomic Outlook, High InterestRates and Inflation the Budgetpromises the following:

i. Strengthen financialsystems by implementing

legislative and institutional

reforms,

ii. Provide quality Education &Healthcare facilities,

iii. Increase in infrastructureinvestments especially in

roads, energy, railway,

ports and water supplies,iv. Stable growth and

development across

Counties by investing in

Kenyans,

v. Deepen reforms in thepublic service to enhance

efficiency and

effectiveness,

vi. Improve competiveness byremoving regulatory

burdens on smallbusinesses,

vii. Investment in Agricultureto ensure food security,

viii. Setting aside resources forthe forthcoming General

Elections

Income Tax

i. Tax RatesThe Corporation tax rateremains unchanged at 30%

Personal tax brackets also

remain unchanged.

ii. Transmission of Messagessubject to deduction of

withholding tax

iii. Charitable organisations tobe vetted

iv. Tax Allowances forCommercial Buildings

v. Tax Allowances for Hotels

(w.e.f. 1 January 2013)

Transfer Pricing

The transfer pricing rules havebeen amended to allow theCommissioner to prescribe theconditions and procedures toguide the application of thetransfer pricing methods. Therewill however be consultationswith the stake holders before therules are gazetted. (w.e.f. 14June 2012)

Customs and Excise

Import duty reduced/ exempt on

following items.

(w.e.f 1st Jan, 2013)

i. Road Guard Rails from25% to 10%.

ii. Top set boxes used fordigital analogue

terrestrial transmissionfrom 25% to 0%.

iii. Inner glass infills forvacuum flasks from 25%

to 10%.

iv. Software from 25% to0%.

v. Food supplements andmineral premix from

10% to 0%.

vi. Electrical energy from10% to 0%.

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vii. Rice from 75% to 35%for a period of one year.

viii. Inputs for use in themanufacture of

Diagnostic Kits is now

exempt.

ix. Inputs for beekeepingare now exempt.

Increase in Import Duty on

the following items:(w.e.f 1st Jan, 2013)

i. Galvanized wire from 0%to 10%.

ii. Towers and latticemasts from 0% to 10%

for a period of one year.

Duty Remission on the

following items:(w.e.f 1st Jan, 2013)

i. Inputs for manufactureof food supplements for

infants and HIV/AIDS

infected persons.

ii. Palm Stearin, RBD for aperiod of one year.

iii. Cathodes and sectionsof cathodes for a period

of one year.

Value Added Tax

Rate of VAT

The rates of tax proposed in the

new bill are:

0% for zero-rated supplies 16% for other suppliesThis means that electricity,

diesel oils for industrial use and

residual fuel oils now attract16% tax and not the favorable

rate of 12%

Zero-rated goods to become

taxable

Maize and wheat flour Ordinary bread, glutten

bread and unleavened bread

Computer software Milk and cream (except

unprocessed milk) Sanitary towels and

tampons

Medical dressings Newspapers, journals and

periodicals

Exercise books and printedbooks

Cinematographic camerasand projectors

Writing or drawing chalk

Zero-rated services to become

taxable

Electrical energy todomestic households

Services to film producersExempt goods to become

taxable

Helicopters and aircrafts Cut flowers Wood charcoalExempt services to become

taxable

Management of unit trustsor collective investments

Postal services Hiring, leasing and

chartering of aircrafts and

helicopters including air

ambulance aircrafts

Entertainment performed byKenyan artists

Tour operation and travelagency services

Zero-rated goods to become

exempt

All electrical and mechanicalappliances including

generators

Mosquito nets Kerosene type jet fuel

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Some goods and services to

become taxable after 3 years

Some supplies such as

petroleum products and zero-

rated goods like medical

equipment and medicaments

shall become taxable at the

standard rate after a period of

three years.

Miscellaneous

The Traffic Act

The Motor vehicle road license

has been reinstated and is

required to be renewed annually

THE KENYA REVENUEAUTHORITY ACT

The definition of a tax agenthas been amended to meanperson who is registered by theCommissioner. The tax agent

shall be a registered accountantand be a member of theInstitute of Certified PublicAccountants of Kenya or anadvocate of the High Court ofKenya or former TaxAdministrator or recognized bythe Commissioner as a tax agentand be tax compliant.The Main functions of a taxagent: Prepare and submit tax

returns Liaise with the Kenya

Revenue Authority

Advise and represent a taxpayer in matters pertainingto tax.

Deal with any mattersrelating to tax on behalf ofthe tax payer.

THE INSURANCE ACT

Under the act the Commissionershall be required to investigatean insurer if requested by anyregulatory body.

Insurers shall now be required to

present their quarterlyunaudited accounts within 30days after end of the relevantquarter, as opposed to theprevious 45 days.The insurance regulatoryauthority shall now, from time totime carry out an assessment ofsuitability of persons Managingor Controlling InsuranceCompany.

THE BANKING ACT

Where a Bank conducts businessthrough agent(s) the Bank shallbe held liable for any acts oromissions of the agent thatrelate to the Business.A non-operating holdingcompany approved by CentralBank can now hold, directly orindirectly or otherwise have abeneficial interest in more that25% of the share capital of anybank. Earlier only thegovernment, State Corporation

or another bank were permittedto.

THE RETIREMENT BENEFITS

ACTRetirement Benefits Schemesare now barred from appointingcorporate trustees related totheir sponsors. This is intendedto remove conflict of interest inthe administration of theschemes and safeguard theinterests of the savers.A maximum of 60% ofmembers contributions can beused as a guarantee for

mortgage however; theguarantee should cover theinitial transaction fees includingpurchase deposit, applicableduties and taxes, valuation andLegal fees for the acquisition ofthe house.

CAPITAL MARKETS ACT

The minister proposed to amendthe Capital Markets Act to createa framework for GrowthEnterprise Market Segment

(GEMS) within Nairobi SecuritiesExchange (NSE) to target smalland medium enterprises. Thiswas done because the NSE hashistorically been used by fairlylarge companies.

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Budget HighlightsTanzania

Economic Review

The 2012/2013 budget was

presented by Hon Dr. William

Augustao Mgimwa on

14.06.2012.

The economy recorded a

resilient growth of 6.4% in 2011

as compared to 7% in 2010.

Per Capital Income has also

increased by 13% to USD 551.

Measures undertaken to curb

various shortfalls

The government has, with a view

to mitigate high cost of living

spent Tshs. 296 Billion for

Emergency Power Plan to sort

out problems of electricity

supply.

USD 183 Million were spent in

construction of power generatingplant of 100 MW in Dar es

Salaam and 60 MW in Mwanza.

Tshs. 27 Billion were spent to

purchase and distribute

120,000 tons of maize to

mitigate food shortage.

Import permits were issued to

import 200,000 tons of sugar.

The Central Bank lending rateswere increased from 7.58% to

12.58% and deposit rates were

increased from 20% to 30%respectively.

VAT

Entities registered under the

third schedule of VAT Act and

were exempt from paying VAT,

will now be required to pay VAT

on taxable supplies, but at a

reduced rate of 10% instead of

18%.

Electronic Fiscal Devices have

been exempted from VAT.

VAT on equipments for storage,transportation and distributionof natural gas have beenexempted.(Above measures are intended toincrease Government Revenueby Tshs. 22,565.1 Million)

Income Tax

Low-income earners with a

turnover below Tshs. 3 Million

are now exempted from paying

Income Tax.

Rates for income earners with

turnover below Tshs. 20 Million

have also been amended.

Non-Residents will now be

eligible for withholding tax to be

deducted at rate of 10% on

interest income from banks.

Resident Corporations holding

more than 25% shares will nowbe subject to a deduction of

withholding tax at the rate of 5%

on dividends.

Capital gains tax will now be

applicable on sale of shares of a

local company by either the

parent/offshore company.

PAYE threshold rose from Tshs.

135,000 to Tshs. 170,000.

The Dar es Salaam Stock

Exchange has now been

exempted from Income Tax.

Licence holders under The

Gaming Act will now be

exempted from Income Tax

provided they have already paid

tax under The Gaming Act.

Withholding Tax on interests

paid by foreign banks to

strategic investors has now been

exempted.

(Above measures are intended to

increase Government Revenue

by Tshs. 105,672.3 Million)

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Excise Duty

Excise Duty on HFO has been

abolished.

Music and Film products will be

subjected to Excise Duty (w.e.f

01.01.2013)

Imported fruit juices will attract

a duty of Tshs. 83 per litre while

locally produced fruit juices

shall be subject to duty at the

rate of Tshs. 8 per litre.

Excise duty on soft drinks,

wines, cigarettes and beers has

been increased in the range of

between 20 to 25%.

Natural gas for industrial use

will now attract excise duty of

Tshs. 0.35 per cubic feet.

Excise duty on airtime has been

increased from 10% to 12%.

(Above measures are intended to

increase Government Revenue

by Tshs. 144,054.9 Million)

Export Levy

Export duty on raw hides has

been increased from Tshs.

400/kg or 40% to Tshs. 900/kg

or 90% whichever is greater.

The Gaming Act

Gaming tax for Casino has been

increased from 13% to 15%.

Gaming tax has been introduced

on sports betting at 6% of total

stakes, on SMS lotteries at 43%

and on Internet casino at 15%.

Miscellaneous

Personalised Vehicle

Registration plates will now beavailable at a cost of Tshs. 5

Million for three year period.

Airport

Airport service charge for

International Travel has been

increased to USD 40, while for

local travel, service charge has

increased to Tshs. 10 Thousand.

Motor vehicle exemptionbeneficiaries will have to pay

excise duty of 20% on

importation of motor vehicles

aged 8 years or more.

Common External Tariff

Changes in the Common

External Tariff (CET) are in line

with other East African Countries

forming the EAC and have been

highlighted in the current budgetof Kenya.

BUDGET SOURCE AND

ALLOCATION

The budget projections for the

year 2012/13 reflect

expenditure of Tshs. 15,120

Billion.

Budget allocation

Revenue Billion Tshs

Domestic

Tax 8,071Non Tax 645LGA 362Budget Support 842Foreign loans &Grants 2,314DomesticBorrowing 1,632Non ConcessionalBorrowing 1,254Total 15,120

Expenditure Billion Tshs

Recurrent

ConsolidatedFinancial services 2,745Salaries & Wages 3,781Other Ministries 4,066

10,592

Development

Local 2,214Foreign 2,314

4,528______

Total 15,120

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Budget Highlights

Rwanda & Burundi

RWANDA BUDGET REVIEW

Economic Review

The 2012/2013 budget waspresented by The Minister forFinance and Economic PlanningJohn Rwangombwa on 14th June,

2012.

The GDP growth for the year2011 was 8.6%. However,projected growth is at 7.7% for2012 due to volatilities in theworld economies.

Inflation is projected to bearound 7.5% in 2012 and likelyto be stable at 5% in themedium term.

The local currency has beencomparatively strong vis-a-vis theUS Dollar depreciating a minimal

1.6% over the period of 12months.

Tax

Presumptive tax rates for SMEshave been revised and reduced.

For SMEs having a turnover lessthan Rwf 12 Million presumptivetax rates will be as under:

Turnover Tax amountBelow Rwf 2 Million 0Rwf 2 4 Million 60,000

Rwf 4 7 Million 120,000Rwf 7 10 Million 210,000

Rwf 10 12 Million 300,000

Presumptive Tax on turnoverabove Rwf 12 Million upto Rwf50 Million has been reduced

from 4% to 3%.

Common External Tariff

Tax rate on constructionmaterials has been increasedfrom 5% to 10%.

Other Changes in the CommonExternal Tariff (CET) are in line

with other East African Countriesforming the EAC and have beenhighlighted in the current budget

of Kenya.

Budget & Source Allocation

The budget projections for theyear 2012/2013 reflectexpenditure of Rwf 1,385.3Billion. Source and allocation ofthe funds is as under:

Budget Allocation

Revenue Billion Rwf

DomesticTax 641.2Non-Tax 83.2

Privatisation 12.2External Grants 496.2Domestic Borrowing 8.7External Borrowing 143.8Total 1,385.3

Expenditure Billion Rwf

Recurrent 708.1

Development 647.3

Net lending 22.0Arrears 8.0Total 1,385.3Sectoral Budget Allocation

Sector Allocation %

Infrastructure 23.3%Productive Capacity 17.0%Human Development& Social Sectors 32.7%

Governance &Sovereignty 27.0%

BURUNDI BUDGET REVIEW

The Burundi Budget for 2012

was presented in December,2011.

The economy is expected togrow at 4.8% in 2012 compared

to 4.2% in 2011.

The country is mainly dependenton exports of tea & coffee as wellas external aid.

The 2012 budget is of 1.2Trillion francs and will besourced by revenue from taxes of544 Billion Francs. External aidis estimated at 438 BillionFrancs leading to a budgetdeficit of 115 Billion Francs.

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Budget Highlights

East African Community

The Budget for EAC waspresented by Hon. Musa Sirmaat EALA Chambers Arusha on24th May, 2012.

Theme of this years budget isImplementation of theCommon Market and laying thefoundation for a MonetaryUnion. The estimatespresented for financial year2012/13 have taken intoaccount the strategic objectivesunder EAC DevelopmentStrategy (2011 16) and alsothe priorities that Council hasset for the period.

On economic front, the real GDP

of EAC expanded by 5.9 percentin 2011 compared to 5.8percent in 2010. In spite ofglobal economic slowdown andpossible mild recession inEurope, projected growth in EACis expected to be 6.0 percent.

Key Highlgihts

Intra EAC trade has shown

impressive growth with theturnover now crossing USD 4Billion as compared to USD 2

Billion in 2005.

A milestone decision has been

arrived at to implement a SingleCustoms Territory to attainfunctioning of a CommonMarket.

Revised Bill on One Stop BorderPost will soon be presented for

finalisation.

EAC expects bills on Anti-Counterfeiting, Piracy andIntellectual Property Rights willalso be tabled for approval in

the coming year.

Partner states have agreed onGross Vehicle Mass of 56tonnes, 7 axles maximum aspart of the harmonisation ofVehicle Control Regime.

Tripartite arrangement initiativeis in process between COMESA

EAC SADC forimplementation of a Free TradeArea and subsequently a

Customs Union.

First Ministerial ReviewConference on Africa-TurkeyPartnership and business forumwas held in Turkey and wasattended by the EACSecretariat. The event isexpected to yield USD 350Billion in mutual tradeagreements.

The budget is financed asunder:

Particulars MillionUSD

Partner States 35.37ContributionPartner States 4.82Through agenciesDevelopment Partner 97.08ContributionsOther Income 1.04

Total 138.31

Six global priorities and twospecial priorities will beimplemented in the first year of

implementation of the MediumTerm Expenditure Framework(MTEF) of 3 years 2012/13 2014/15. The fund allocationfor these priorities is presentedas under:

Particulars MillionUSD

Common Market 23.50ProtocolCustom Union 8.50

ConsolidationEast Africa 9.60Monetary UnionCross- Border 12.53InfrastructureEAC Food Security 2.87& Climate Change PlanLake Victoria 38.14Basin CommissionPersonnel Emoluments 29.86Inter-University 10.11Council for East AfricaLake Victoria 3.20

Fisheries OrganisationTotal 138.31

7/31/2019 EA Budget 2012

21/22

7/31/2019 EA Budget 2012

22/22