Statement by an IMF Staff Mission at the Conclusion of a Visit to Rwanda

Press Release No.08/57
March 18, 2008

An International Monetary Fund (IMF) mission to Rwanda, led by Zuzana Murgasova, visited Kigali during March 5-18, 2008 to review the economic performance under Rwanda's three-year Poverty Reduction and Growth Facility (PRGF) arrangement with the IMF and discuss the economic program for 2008. The mission met with the Minister of Finance and Economic Planning, Honorable James Musoni, the Governor of the National Bank of Rwanda, François Kanimba, other government and central bank officials, representatives of the business community and civil society, and development partners.

The mission issued the following statement in Kigali today:

"Rwanda's economy has continued to perform well. Despite a cyclical weakening in agriculture, economic growth reached 6 percent, fueled by a robust expansion of the construction and services sectors. After a peak in early 2007, inflation declined and remained in single digits through the end of the year.

"The policy performance under the PRGF-supported program was satisfactory in 2007. The fiscal program was broadly on track, although the end-year target on net credit to government was missed due to a delay in disbursements of donor funds. While the reserve money target was met, the conduct of monetary policy was challenging as fiscal spending accelerated in the second half of the year.

"The economic program for 2008 is in line with the authorities' medium-term policy framework, defined in the Economic Development and Poverty Reduction Strategy Paper (EDPRS). The program aims to address impediments to growth and poverty reduction, while preserving macroeconomic stability.

"The outlook for growth remains favorable in 2008, particularly given the strong harvest in the early part of the year. The main challenge is to maintain macroeconomic stability and low inflation in light of increasing international prices, higher transport costs of imported goods, and scaling up of fiscal spending. This requires a close coordination of fiscal and monetary policies, and commitment to adjust policies as necessary.

"To preserve external debt sustainability, borrowing for large-scale infrastructure projects in the priority sectors needs to be carefully evaluated. We welcome the authorities' decision to develop a debt management strategy to guide future borrowing and prevent a re-accumulation of unsustainable debt.

"We are encouraged by the progress in implementation of broad-based structural reforms, particularly in the areas of tax administration, public financial management, and financial sector. We welcome the authorities' continued commitment to pursue these reforms in the future.

"In the coming weeks, the authorities and IMF staff will pursue further discussions on some remaining program-related issues.

"The mission would like to thank the authorities for their excellent cooperation."



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