Press Release No. No: 14/464

Press Release: Statement by an IMF Mission at the Conclusion of its Visit to Rwanda

October 7, 2014

An International Monetary Fund (IMF) mission, led by Mr. Paulo Drummond, visited Kigali during September 22 to October 7 to conduct the 2014 Article IV Consultation and the second review of the economic program supported by the Policy Support Instrument (PSI).¹ Mr. Drummond, released the following statement at the end of the mission:

“Rwanda’s recent economic performance has been favorable. Growth in the first half of 2014 rebounded to 6.8 percent. Agriculture output also recovered due to favorable climate conditions. The pick-up in growth was broad-based, including construction, real estate, and services. Consumer price inflation remained low at below 1 percent at end-August, driven by low import and food prices.

“The main objectives of the 2014/15 budget remain within reach: greater revenue mobilization, targeting an increase of 1 percentage point in the tax revenue ratio to 16 percent of Gross Domestic Product (GDP); containing current spending while protecting priority spending; and limiting domestic financing to avoid crowding out the private sector. Aid flows have increased, but donor disbursements are expected to be about 1 percent of GDP lower relative to the 2014/15 budget. The mission welcomes the decision by the authorities to respond and keep the overall budget in line with available resources.

“Policy performance under the IMF-supported program remains satisfactory. All quantitative indicators for end-June 2014 were met. The fiscal position through end-June 2014 was broadly in line with PSI objectives, except for slightly less than anticipated revenue collection; the monetary program was on target; and structural reforms advanced broadly as planned.

“Looking ahead, economic growth is projected at 6 percent in 2014, and end-year inflation is expected to be 3.2 percent. International reserves are targeted to remain at about 4 months of imports.

“The authorities and the mission discussed economic policies and reforms to maintain economic stability and manage a successful transition from a public sector-led, aid-dependent economy to a more private sector-led economy in the medium term. Key to sustaining high growth will be the implementation of the authorities’ strategy to further reduce the cost of doing business and remove impediments to private sector development. In this regard, the mission welcomes the government’s intention to improve project implementation, including through increased oversight, and prepare a targeted public investment plan for infrastructure projects in priority areas, such as water, energy, and transport. The mission also welcomes the authorities’ plan to explore all concessional financing options, private sector participation, including through public private partnership (PPP), before considering non-concessional resources.

“The mission met with Minister of Finance and Economic Planning Amb. Claver Gatete, Governor of the National Bank of Rwanda Hon. John Rwangombwa, as well as with other senior government officials, development partners, and representatives of the business community and civil society.

“Subject to management approval, the IMF's Executive Board is expected to consider the second PSI review and the Article IV Consultation in December 2014.”

¹ The PSI is an instrument of the IMF designed for countries that do not need balance of payments financial support. The PSI helps countries design effective economic programs that, once approved by the IMF's Executive Board, signal to donors, multilateral development banks, and markets the Fund's endorsement of a member's policies (see http://www.imf.org/external/np/exr/facts/psi.htm). Details on Rwanda’s current PSI are available at www.imf.org/rwanda.