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KIGALI, June 8 (Reuters) - Rwanda plans to raise government spending by 7 percent in the 2017/18 fiscal year to 2.09 trillion francs ($2.58 billion), its finance minister said on Thursday.
Claver Gatete told parliament that 17 percent of the budget will be funded by donors with the rest coming from internal revenue and borrowing, of which 362.8 billion francs will be borrowed from outside Rwanda.
"The government's objective is to reduce the reliance on external donor support especially where grants are concerned. However, for the time being this support remains vital for our development."
The government expects to collect 1.20 trillion francs in revenue during the fiscal year, which runs from July to June, up from 1.081 trillion in 2016/17.
The minister said 54 percent of the budget of the tiny central African nation would be used on recurrent expenditure with an increment of 131 billion francs, part of which will be used to finance August presidential elections and salaries in new government institutions.
The government planned to use 937 billion francs on development projects, an increase of 44.4 percent from the fiscal year ending June, Gatete said.
The cash will be used for promoting export products, agriculture and expansion of state-run airline Rwandair, completing the construction of a new airport and renovation existing airports.
The money will also go to towards roads, power transmission lines and water supply, Gatete said.
Rwanda's economy is expected to grow 6.2 percent in 2017 and 6.8 percent in 2018 while inflation is expected to be at 7 percent by the end of 2017, Gatete said in May.
He said inflation would edge down to 6 percent in 2018.
The central African nation has posted soaring growth rates in recent years mostly fuelled by business-friendly policies and strong inflows of foreign investment. ($1 = 811.0000 Rwandan francs) (Reporting by Clement Uwiringiyimana; Editing by George Obulutsa and Toby Chopra)