Press Release No. 10/408

Press Release: Statement by an IMF Mission to Rwanda

November 1, 2010

An International Monetary Fund (IMF) mission led by Ms. Catherine McAuliffe visited Rwanda October 12-26, 2010 to conduct the 2010 Article IV Consultation and the First Review under the Policy Support Instrument (PSI). The mission met with the Minister of Finance and Economic Planning, Honorable John Rwangombwa, the Governor of the National Bank of Rwanda, François Kanimba, other government and central bank officials, representatives of the business community, and development partners.

The mission issued the following statement in Kigali on November 1, 2010:

"Performance has been satisfactory under the first review of Rwanda’s IMF-supported PSI program. All quantitative assessment criteria and structural benchmarks for June 2010 were met. Structural reforms are on track. Notably, public financial management has continued to improve with a further roll-out of the government financial information system, while revenue administration has been strengthened through a consolidated revenue collection arrangement across all agencies.

"Rwanda’s economy is recovering from the external and domestic shocks of the past two years. After slowing down to 4.1 percent in 2009 from 11.2 percent in 2008, real gross domestic product (GDP) growth is expected to reach about 6 percent in 2010, driven mainly by strong growth in services, particularly in the telecom subsector, construction, and exports, even though credit to the private sector has grown significantly less than expected for the year. For the first time in many years, inflation has remained below 5 percent in 2010. The fiscal stimulus of the past two years is unwinding, while pro-poor spending has been protected. The external payments position has improved with a build-up of international reserves. The risks to the outlook include slower pickup in external demand and domestic credit, as well as uncertainties about global food and fuel prices.

"The mission welcomes the commitment of the authorities to continue pursuing broad-based structural reforms, particularly in the areas of public financial management, tax administration, and financial sector reform to boost competitiveness and growth. The authorities are wisely pursuing growth-enhancing reforms by focusing capital spending on key infrastructure bottlenecks, building the necessary supervisory capacity to accompany financial sector deepening, and further strengthening economic management capacity, including by improving the quality of economic statistics. These reforms will also help Rwanda make progress toward meeting its Millennium Development Goals.The authorities are aiming to achieve a sustainable fiscal position over the medium term by focusing on mobilization of domestic revenues aimed at reducing Rwanda’s aid dependency. The authorities should continue reforms toward greater exchange rate flexibility to enhance monetary policy effectiveness.

"The IMF Board is expected to consider the staff report on the 2010 Article IV consultation and the first PSI review in December 2010. The mission thanks the authorities for their warm hospitality and constructive dialogue."