(Adds details on fund to support private sector)
KIGALI, May 21 (Reuters) - Rwanda’s economic growth is expected to slow this year as the COVID-19 pandemic hits tourism, transport and hospitality, the finance minister said on Thursday.
Uzziel Ndajigimana said the East African nation will hike government spending in the July 2020 - July 2021 financial year, with a 100 billion franc fund put in place to lend to companies hurt by the coronavirus-related slowdown.
Ndajigimana said economic growth was forecast to fall to 2% this year from 9.4% in 2019, before rebounding to 6.3% next year and 8% in 2022.
Presenting the draft 2020/21 budget, Ndajigimana said Rwanda will increase spending by 7.5% to 3.245 trillion Rwandan francs ($3.43 billion).
Donors will fund 15.2% of it, with the rest coming from revenue and debt, Ndagijimana said, adding that Rwanda would borrow 783.4 billion francs externally.
“Government investments will acquire 306.5 billion, including a part allocated to supporting private companies hurt by COVID-19 effects,” Ndagijimana said.
Without giving further details, he also said part would be used to fund the expansion of government-owned airline RwandAir, which is typically allocated money annually.
Rwanda, like other East African nations, will present its final budget in June.
It has suspended international passenger travel, restricted movement and banned social gatherings to contain the novel coronavirus.
Ndagijimana said he hoped passenger flights would resume, although RwandAir also operates cargo services.
He said the hotels and restaurants sector would contract by just under a third, while transport will contract 1.9% due to the grounding of flights.
Agriculture will grow 3%, compared with 5% last year, while industry will expand 4%, compared with 17% a year ago. Services will grow 1%, compared to 8%, due to the impact of the pandemic on tourism and conferences, he said.
Rwanda has 314 confirmed coronavirus cases of the coronavirus, with no deaths so far. The International Monetary Fund gave Rwanda $109.4 million in emergency coronavirus funding in April.
$1 = 947.0390 Rwandan francs Reporting by Clement Uwiringiyimana; Editing by George Obulutsa, Kirsten Donovan
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