Rwanda Gets $164.6m from IMF after Reviews
The International Monetary Fund, IMF, said on Wednesday it was releasing a combined $164.6 million in funds to Rwanda after its executive board concluded reviews of the country’s support programmes. Rwanda’s economy is forecast to expand 6.6% this year and 6.5% next year after an 8.2% expansion last year, IMF said in a statement.
“While fiscal consolidation may temporarily dampen growth, a rebound to 7.3 per cent is anticipated in the medium term,” it said. Rwanda’s economy largely depends on agriculture, tourism and manufacturing.
IMF concluded the third review under the Policy Coordination Instrument (PCI) and the arrangement under the Resilience and Sustainability Facility (RSF), and the first review under the Standby Credit Facility (SCF) arrangement with Rwanda. With this review, about US$ 76.2 million, or SDR 57.5 million, under the RSF and US$ 88.4 million (SDR 66.75 million) under the SCF became available.
Despite challenging external conditions, Rwanda’s economy maintains robust growth. Real GDP growth surpassed expectations in 2023 at 8.2 percent, with services, construction, and post-flood recovery in food crop production key contributors.
While fiscal consolidation may temporarily dampen growth, a rebound to 7.3 percent is anticipated in the medium term. Inflation has declined steadily since January 2023 to 4.2 percent in March, thanks to a slowdown in food prices and core inflation.
The current account deficit widened more than expected in 2023, but international reserves remain adequate at about 4.1 months of imports at the end of 2023. Going forward, the policy mix should prioritize macroeconomic and financial stability, fiscal sustainability, and the restoration of buffers.
A carefully planned fiscal stance is needed to mitigate the impact of the 2023 floods while maintaining a credible and balanced fiscal consolidation over the medium term. Monetary policy should target inflation within the desired range, while maintaining exchange rate flexibility to manage external shocks. Furthermore, vigilant oversight of financial stability risks, particularly concerning large exposures and rapid credit growth, is important.
Under the PCI/SCF, all quantitative targets were met, and reforms on the social safety net and spending rationalization were implemented.
RSF measures to implement climate budget tagging, integrate climate risks into fiscal planning, and strengthen disaster risk management were also implemented, contributing to Rwanda’s resilience to climate shocks and positioning the country as a leader in regional climate initiatives. #Rwanda Gets $164.6m from IMF after Reviews Naira Suffers Big, CBN Goes Ballistic Against FX Whales
