Rwanda’s trade deficit widened 19.9% to over $2.3 billion from January to November 2022, up from $1.9 billion in the same period in 2021, according to official trade data from the National Bank of Rwanda and the Ministry of Finance and Planning. .
A trade deficit or negative trade balance is the difference that occurs when a country’s imports exceed its exports.
Meanwhile, Rwanda’s imports increased by 14.3% in volume and 27.6% in value over the period January-November 2022 to over US$4 billion, up from US$3.1 billion in the same period in 2021. The increase was mainly due to imports of energy and lubricants, which increased by 91.7% in value and 24.2% in volume due to significant price increases.
Meanwhile, Rwanda’s total exports increased by 19.1% in volume and 39.4% in revenue from January to November 2022 to over US$1.7 billion, up from over US$1.2 billion in 2021. Among such achievements were tea and coffee prices, which rose by 7.9% and 40.4% respectively, and gold exports, which increased by 55.5%.
The deficit is largely due to the high value of imports such as consumer staples, intermediates, energy and lubricants, according to the Treasury Department. This increase is related to the demand for household goods and hotel supplies when importing goods as social events such as weddings and conferences, including the Commonwealth Government Summit (CHOGM) in Kigali in June 2022. increase.
Other factors are higher fertilizer prices after the crisis in Russia and Ukraine, and higher fuel prices on international markets.
According to the African Development Bank (AfDB), fertilizer prices have risen by 300% (triple) in May 2022 as a result of the war between Russia and Ukraine that started on February 24, 2022. Finance and Economic Planning Minister Uziel Ndagizimana told The New Times newspaper that reducing the trade deficit by increasing the country’s export earnings is “a goal, but not a long-term one because imports and exports are linked.” There is,” he said.
“In order to be able to export, we have to invest in production, and part of the investment in production requires additional imports. We will have to import machinery, spare parts, all the inputs and semi-finished products that are produced, so imports of this component will increase,” he explained.
“If prices rise globally, we will spend more on imports, even if we keep the same amount.”
MP Omar Munyaneza, chairman of Congress’ National Budget and Heritage Committee, stressed the importance of imports and exports in international trade, telling The New Times that no country can live without imports. “We are trying to reduce import bills and increase exports. …In order to increase exports, we need more investment,” he said.
Munyaneza said the country is investing in industrialization to encourage the production of locally made products.
“When you invest, imports increase and exceed exports, but the reverse happens when investment starts to pay off. In other words, it is understandable that importing the equipment necessary to attract industry to Rwanda would incur huge import costs. but. Once these factories start producing, they will benefit from exports.