## 1rwaea2020001

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---

### Recent developments
- Real GDP rose by 10.3 percent y/y in the first half of 2019, with pronounced increases in services and construction.
- Headline inflation settled at 4.4 percent y/y in October 2019; core inflation was 2.8 percent in October.
- FY 18/19 fiscal outturns (percent of GDP):
  - Total revenue: Prog. 19.0 percent; Actual 19.4 percent.
  - Tax revenue: Prog. 16.1 percent; Actual 16.5 percent.
  - Grants: Prog. 4.9 percent; Actual 4.6 percent.
  - Total expenditure and net lending: Prog. 29.3 percent; Actual 30.3 percent.
  - Capital expenditure: Prog. 12.0 percent; Actual 12.4 percent.
  - Overall balance (incl. grants, commitment basis): Prog. -5.5 percent; Actual -6.3 percent.
  - Change in float/arrears: Prog. -0.3 percent; Actual 0.6 percent.
  - Overall balance (incl. grants, cash basis): Prog. -5.8 percent; Actual -5.7 percent.
  - Financing: Prog. 5.8 percent; Actual 5.7 percent.
  - Foreign financing (net): Prog. 5.0 percent; Actual 5.2 percent.
- Authorities allowed an increase in accounts payable (float) by 0.9 percentage points of GDP as a temporary solution; about one-third of the float was cleared by previously-anticipated disbursements early in FY19/20.
- Domestic liquidity pressures increased interbank market activity; interbank rates rose above the policy rate and the central bank engaged in reverse repurchase operations.
- Monetary policy developments:
  - The MPC reduced the policy rate by 50 basis points in May 2019.
  - The MPC left the policy rate unchanged in August and November 2019.
  - Private sector credit growth was 20.1 percent y/y as of September 2019.
- Financial soundness and sectoral indicators:
  - Banking system aggregate NPL ratio fell to 5.6 percent in 2019.
  - Liquidity ratios declined but remained above regulatory minima.
  - Microfinance asset quality improved amid rapid lending.
  - Insurance sector solvent and gradually more profitable, though costs remain high and penetration low.
- External sector:
  - Trade deficit increased by about 30 percent in the first three quarters of 2019.
  - Price declines in traditional exports (tea, coffee, minerals) weighed on export growth; non-traditional exports rose.
  - Trade balance with EAC countries improved significantly.
  - Rwandan franc depreciated by 4.7 percent y/y against the US$ at end-October 2019 (1.2 percent in REER terms).
  - International reserves remained at 4 months of prospective imports as of end-October 2019.

### Outlook and risks
- Growth and inflation projections:
  - Projected growth for 2019 revised up from 7.8 to 8.5 percent.
  - The 2020 growth projection is maintained at 8.0 percent.
  - Despite an end-2019 uptick in inflation, average inflation for 2019 was revised downward along with the terms of trade and the GDP deflator.
- Current account and reserves:
  - Current account deterioration in 2019 was somewhat greater than expected.
  - Gross international reserves projected around 4.4–4.9 months of imports in related projections.
- Risk assessment:
  - Downside risks: fuel prices, regional issues, unpredictable weather.
  - Upside risks: continuation of strong private investment, more regional trade, growth payoffs from large public investment projects.
- Program performance:
  - First PCI review: all but one end-June and continuous quantitative and structural reform targets were met.
  - The 12-month average for y/y headline inflation was below the lower bound of the MPCC in June 2019, triggering a required consultation with the IMF Executive Board.

### Fiscal policy — supporting NST while maintaining sustainability
- Program pillars discussed:
  1. Neutral medium-term fiscal policy stance providing space to implement the National Strategy for Transformation (NST) while safeguarding debt sustainability.
  2. Regaining momentum of domestic revenue mobilization.
  3. Improving fiscal transparency, including systematic identification, assessment, and management of potential fiscal risks.
  4. Supporting the BNR’s new interest rate-based monetary policy framework.
- FY19/20 fiscal adjustments and financing:
  - Government plans to reduce the float accrued in FY18/19 in the second half of FY19/20.
  - Staff agreed with authorities’ proposal to clear the remaining overhang with new external borrowing of up to 0.6 percentage points of GDP to avoid crowding out the private sector.
  - If higher-than-expected concessional disbursements materialize later in FY19/20, existing debt would be refinanced to keep the agreed FY19/20 deficit unchanged.
  - To avoid future deviations, the government will require more planning for conditionality at line ministries and instituted ongoing donor monitoring.
- FY19/20 fiscal stance changes:
  - Programmed FY19/20 deficit will increase from 5.7 to 6.2 percent of GDP.
    - Drivers: additional domestic interest payments (0.3 ppt of GDP), additional domestically-financed investment spending and net lending (0.4 ppt of GDP), and lower projected nominal GDP.
    - Offsets: higher projected tax revenues (0.4 ppt of GDP) related to stronger growth and administrative gains.
  - Program fiscal rule: a 5-year average program deficit ceiling of 5.5 percent of GDP; modest fiscal consolidation in outer years is envisaged to maintain consistency.
- Debate on fiscal rule and risk management:
  - Authorities preferred increasing the ceiling to 6 percent of GDP to allow frontloading of public investment.
  - Staff recommended maintaining the higher precautionary buffer pending:
    - an updated DSA confirming continued low risk of debt distress;
    - results of a draft fiscal risk statement;
    - commencement of a fiscal risk registry;
    - commitments for an annual fiscal risk statement to parliament and a consolidated financial balance sheet of the non-financial public sector.
  - Staff proposed modifying the definition of the program deficit and fiscal rule to avoid “double-counting” of debt arising from GFSM 2014 treatment of a triggered government guarantee (0.8 percent of GDP stock operation) — using a “debt-creating overall balance” that excludes liabilities already included in the DSA that are moved to the budget, while continuing to include additional debt service obligations and net UN PKO operations in debt metrics.

### Domestic revenue mobilization and fiscal transparency
- Revenue mobilization commitments:
  - Program commitments to increase tax revenues by 0.2 percentage points of GDP annually.
  - Authorities requested IMF TA to develop a Medium-Term Revenue Strategy (MTRS).
- Measures underway:
  - Costing and streamlining tax incentives:
    - New tax expenditure report published as part of the FY19/20 budget revealed total tax expenditures in FY 17/18 at about 2.5 percent of GDP, with VAT exemptions accounting for about 60 percent of the total.
    - Authorities are evaluating options to better target existing incentive schemes.
  - Improving tax compliance — Rwandan Revenue Authority (RRA) actions:
    - Implementing recommendations from a second TADAT requested in 2019.
    - On track to meet end-December reform targets to produce a report on VAT compliance options and to automate a risk-based verification process for refund claims.
    - Boosting registration using other government databases; number of taxpayers increased by 12 percent in FY18/19.
    - Expanding use of electronic billing machine (EBM) software to provide real-time VAT transaction information to RRA.
    - Using SMS reminders for filing and payment obligations.
    - Linking EBM and customs declarations to E-tax systems to detect underreporting.
    - Promoting voluntary VAT compliance via increasing “lottery” schemes to incentivize customers to request invoices.
- Fiscal transparency and risk management:
  - Authorities and staff agreed the fiscal rule could be revisited following progress on systematically identifying, assessing, and managing fiscal risks.
  - Staff suggested key considerations for reconsidering the fiscal rule at the next review:
    - Updated DSA showing continued low risk of debt distress.
    - Results of a draft fiscal risk statement.
    - Commencement of a fiscal risk registry.
    - Longer-term program commitments for an annual fiscal risk statement to parliament and a consolidated non-financial public sector financial balance sheet.

### Fiscal transparency, reporting, and balance sheet compilation
- Migration to the GFSM 2014 framework for quarterly reporting is on track.
  - A budget execution report for the first quarter of FY19/20 is expected to be produced by end-December using GFSM 2014, after mapping RRA’s reporting into GFSM categories.
  - Expanding the coverage of GFSM 2014 reporting (end-December 2020 RT): plans to include local government revenues into the current IFMIS to improve timeliness of reporting; extra-budgetary units can be included ultimately (requires dealing with spending from own revenues in IFMIS).
  - Government plans to collect information needed for quarterly reporting of general government activities (excluding RSSB), starting in FY20/21.
- Publish audit opinions: authorities committed to publish audit opinions of the financial statements of the budgetary central and local governments, starting with FY18/19.
- Compilation of a financial balance sheet for the nonfinancial public sector:
  - Annual consolidated financial statement currently includes stocks of cash and cash equivalents, account payables, and receivables.
  - Planned broadening to include equity and loan assets and debt and loan liabilities.
  - Once quarterly information on general government is available, a comprehensive financial balance sheet can be compiled.
- Staff recommendation: transitioning forecasting to the new format could require additional resources.

### Fiscal risk identification and management
- Roadmap agreed for identifying, assessing, and managing existing fiscal risks, while avoiding any new risks for the government balance sheet.
  - Preliminary fiscal risk statement produced, with AFRITAC East TA support.
  - Government hopes to set up a fiscal risk committee by spring to review the statement and start compiling a registry, enabling an annual fiscal risk statement.
  - The consolidated balance sheet plus the fiscal risk statement could be included as longer-term program commitments.
- De-risking objective: to avoid taking new financial risks on the public balance sheet, government is proactively using de-risking mechanisms to leverage more private finance for targeted priority investments (e.g., affordable housing and water).

### RSSB reforms and sustainability challenges
- RSSB characteristics:
  - Largest financial entity in the country; runs six insurance schemes.
  - Fully government-owned but operated off-budget; receives earmarked donor support for health insurance costs.
- RSSB main challenges and reform actions:
  - IT modernization: an IT system has been procured (end-June 2019 RT) to update paper-based systems and improve reporting, transparency, and fraud detection.
  - Addressing financial pressures from expiring official grants: RSSB recommends measures to improve cost efficiency and administrative efficiency and increase burden-sharing by beneficiaries.
  - Make each insurance scheme self-sustaining: RSSB intends to ring-fence schemes for self-sustainability; will require improving asset allocation, particularly for the pension scheme (end-June 2020 RT).

### Monetary policy stance and implementation
- Monetary policy stance:
  - Staff and authorities agree the BNR’s stance is appropriate.
  - BNR target: 5.0 percent (target referenced explicitly).
  - BNR actions: cut rates at the trough in May and kept rates on hold in August as inflation began to rise toward the BNR’s target.
  - Staff and authorities expect inflation to rise modestly above the target in 2020 before falling back toward the target.
- Inflation and growth statistics:
  - Headline inflation was below the BNR’s target between June 2017 and June 2019, averaging 1.9 percent y/y over this period.
  - Core inflation averaged 2.8 percent y/y over this period.
  - Quarterly real GDP growth has averaged 8.0 percent since 2017.
  - Core inflation averaged 2.9 percent y/y in H1 2019.
- Recommendation: BNR should continue to closely monitor price developments amid continued strong economic growth and bank lending and stand ready to take action should inflation trends deviate from expectations.

### Transition to an interest rate-based operational framework and liquidity management
- Progress and actions:
  - BNR reduced excess bank reserves in early 2019, increased banks’ use of the interbank market, and injected liquidity amid pressures in the second half of 2019.
  - Lending rates began to roughly track the policy rate since late 2018.
  - BNR is upgrading post-MPC meeting communications strategy (end-December 2019 RT), aided by TA.
- Remaining challenges:
  - Banks continue to prefer precautionary reserve buffers, indicating the need for further financial market refinements.
  - Developing a monetary transmission mechanism requires deeper short-term money markets; interbank market historically shallow and stigmatized.
- Liquidity management measures under way or proposed:
  - Enhancement of the repo framework and draining of excess reserves before July led to rising interbank volumes in early 2019.
  - Use of reverse repos to meet banks’ liquidity demands amid July–September 2019 pressures signaled an additional liquidity source.
  - Planned upgrades: allow change of ownership during repos; legal provisions allowing netting repos in insolvency; deepen secondary market (introduce primary dealer system; increase retail investor opportunities); tax incentives to lengthen bank deposit tenors; promote greater use of new electronic interbank trading platform; extend banks’ reserve maintenance period from two weeks to four or five weeks.

### Exchange rate policy and external buffers
- Policy stance:
  - Market-determined exchange rate considered an important element of the interest rate-based framework.
  - FX market interventions should be limited to minimizing excessive exchange rate volatility.
  - BNR continues to intermediate FX given significant ODA flows, underdeveloped private market, and allocation inefficiency.
- External buffer metric:
  - Current level of FX reserve coverage is 4.0 months of next year’s imports.

### Financial stability, development, and inclusion
- Financial sector developments and metrics:
  - Introduction of Basel II/III capital requirements and start of IFRS 9 implementation have not materially impacted intermediation.
  - Bank credit growth: 20 percent y/y as of September.
- Regulatory and macroprudential steps:
  - Introduction of loan-to-value ratios for real estate lending.
  - Steps toward establishing a capital framework for domestic systemically-important banks (D-SIBs).
  - New investment and governance guidelines for banks.
- Financial development and inclusion program:
  - Includes long term savings schemes, domestic de-risking schemes, fintech to improve services for agriculture, and move toward a “cashless” economy via mobile technology.
  - BNR established a “regulatory sandbox” for fintech products.

### Structural policies: NST1 objectives, financing, and private investment
- NST1 overview and financing:
  - Phase I covers 2017–24; built around three pillars: economic transformation, social transformation, and transformational governance.
  - At US$39.2 billion, the cost of NST1 is expected to be shared at 59:41 percent, respectively, between the government and the private sector.
  - Public resources should mainly come from improved revenue collection, combined with around RWF3.7 trillion of external financing (mainly loans).
  - FDI should account for about half of private resources.
- De-risking and private investment:
  - Government seeks to attract private investment using de-risking instruments to target priority development areas (e.g., affordable housing).
- Policies to create jobs and diversify exports:
  - Interventions include consolidating artisanal miners, training agricultural workers in export sectors, marketing Rwandan products externally, upgrading manufacturing technology/processes, enhancing food quality standards, and investment in value addition for processed minerals.
  - Innovation and digital literacy efforts: more R&D, rural training, innovative electronic platforms for basic government services; a new mobile money platform is being piloted among rural farmers.
- Public investment to reduce transport costs:
  - Investment in a large-scale inland cargo handling facility (“dry port”) in Kigali; container turnaround and overall transport and storage costs declined since operations began.
  - RwandAir expanded cargo activities to meet exporter demand.
- Private investment outcomes:
  - Rwandan Development Board reports substantial new FDI in tourism, construction materials, irrigation, and light manufacturing.
  - Examples visited by staff include VW Rwanda assembly plant (joined with Siemens to launch electric cars), Mara Phones, and Sorwathe Tea plantation.

### NST1 financing specifics
- Costing and financing shares and targets:
  - At US$39.2 billion, the cost of NST1 is expected to be shared at 59:41 percent between the government and the private sector.
  - Public resources should mainly come from improved revenue collection, combined with around RWF3.7 trillion of external financing (mainly loans).
  - FDI should account for about half of private resources.
  - Authorities aim to use “de-risking” ODA to leverage private resources while avoiding assuming further financial risks on the government balance sheet.

### Program modalities and selected fiscal metrics
- Quantitative and reform targets:
  - Staff proposes modest changes in the end-December 2019 and end-June 2020 fiscal deficit and NFA targets, reflecting revised timing of ODA flows.
  - The definition of the deficit target will be modified to align with the fiscal rule concept of a non-debt creating deficit.
- Sectoral financing composition (selected shares):
  - 2016/17: 36% Tax revenue; 6% Non-tax revenue; 11% Total grants; 1% Net Domestic Financing; 11% Net Foreign Financing; 16% Foreign private investment; 19% Domestic private investment.
  - 2023/24: 38% Tax revenue; 5% Non-tax revenue; 5% Total grants; 1% Net Domestic Financing; 7% Net Foreign Financing; 17% Foreign private investment; 28% Domestic private investment.

### Debt Sustainability Analysis (DSA) and capacity development
- DSA:
  - The DSA has not been updated since the PCI program request in June 2019, at which time the risk of debt distress was assessed to be low.
  - Bank and Fund staffs have agreed to undertake a DSA update prior to the next program review.
  - Footnote: External borrowing referred to in ¶11 would have a maximum impact on the debt stock of 0.6 percent of GDP.
- Capacity development:
  - Rwanda is an intensive consumer of IMF TA and has a strong track record of implementation.
  - TA areas and notable achievements: PFM, inflation forecasting, debt sustainability, tax policy and administration, national accounts, and financial stability.
  - Transition to SDDS by end-2019.
  - Work with AFRITAC East to develop self-administered courses in financial programming.

### Staff appraisal — macroeconomic and fiscal management
- Staff view:
  - Rwanda continues to show strong commitment to development priorities and maintaining macroeconomic stability.
  - Deviations between realized and planned ODA flows exposed vulnerabilities; triggering of a large guarantee reveals the importance of more actively managing existing fiscal risks.
  - Government is working to mitigate vulnerabilities by enhancing fiscal transparency and better identifying, assessing, and managing fiscal risks.
  - The current program fiscal rule provides a substantial buffer to guard against fiscal risks; additional progress in fiscal risk management would enable assessment of scope to reduce the buffer.
  - Continued efforts to increase tax revenue will provide additional space.
  - Despite the MPCC trigger, implementation of the new monetary policy operational framework is proceeding well, and the current monetary stance is appropriate.
  - Staff welcomes the BNR’s commitment to take further action should trends deviate from expectations.
  - Extensive work on financial stability and inclusion is strengthening the role of the financial sector in supporting development.
  - Meeting NST/SDGs will require new approaches, including leveraging scarce ODA by de-risking private financial inflows while avoiding assuming new financial risks on the government balance sheet.

### Quantitative targets, MPCC, and program reporting (key elements)
- Program period: July 1, 2019 – June 30, 2020; Instrument: IMF Policy Coordination Instrument (PCI).
- Major quantitative targets and definitions (test dates include December 31, 2019 and June 30, 2020, measured cumulatively from June 30, 2019):
  - Ceiling on the debt-creating overall fiscal balance of the budgetary central government (definition excludes certain called guarantees and UN PKO expenses and financing).
  - Floor on Net Foreign Assets (NFA) of the National Bank of Rwanda (definitions exclude encumbered reserve assets).
  - Continuous ceiling on the stock of external payment arrears.
  - Ceiling on net accumulation of domestic expenditure arrears (claims overdue by more than 90 days).
- Adjusters:
  - Ceiling on debt-creating overall balance and floor on NFA are each adjustable by up to RWF 97 billion to reflect shortfalls in budgetary grants/loans and specific contingencies.
- MPCC (Monetary Policy Consultation Clause):
  - MPCC headline inflation defined as the year-on-year rate of change of monthly CPI averaged for the past 12 months (NISR measure).
  - Consultation triggers: deviations outside ±3 percentage points around the midpoint of the target band for test dates prompt discussions with Fund staff; deviations outside ±4 percentage points trigger consultation with the Executive Board.
  - CPI Inflation target and bounds: CPI Inflation target 5.0; Inflation, upper inner-bound 8.0; Inflation, lower inner-bound 2.0; Inflation, upper bound 9.0; Inflation, lower bound 1.0.
- Reporting requirements and frequencies:
  - Weekly data: within seven days of the end of each week.
  - Monthly data: within five weeks of the end of each month.
  - Quarterly data: within eight weeks of the end of each quarter.
  - Specific reporting items include exchange rates, international reserve assets and liabilities, reserve/base money, broad money, central bank and banking system balance sheets, interbank market transactions, government budget operations (quarterly), and comprehensive lists of domestic arrears and public debt (quarterly).

*Source: IMF staff report excerpt (1rwaea2020001 - 2019).*

### 2019. The mission comprised L. Redifer (head), V. Duarte Lledo,

### 1rwaea2020001 - 2019. The mission comprised L. Redifer (head), V. Duarte Lledo,

### Recent developments
- Real GDP rose by 10.3 percent y/y in the first half of 2019, with pronounced increases in services and construction.
- Headline inflation settled at 4.4 percent y/y in October 2019; core inflation was 2.8 percent in October.
- FY 18/19 fiscal outturns:
  - Total revenue: Prog. 19.0 percent of GDP; Actual 19.4 percent of GDP.
  - Tax revenue: Prog. 16.1 percent of GDP; Actual 16.5 percent of GDP.
  - Grants: Prog. 4.9 percent of GDP; Actual 4.6 percent of GDP.
  - Total expenditure and net lending: Prog. 29.3 percent of GDP; Actual 30.3 percent of GDP.
  - Capital expenditure: Prog. 12.0 percent of GDP; Actual 12.4 percent of GDP.
  - Overall balance (incl. grants, commitment basis): Prog. -5.5 percent of GDP; Actual -6.3 percent of GDP.
  - Change in float/arrears: Prog. -0.3 percent of GDP; Actual 0.6 percent of GDP.
  - Overall balance (incl. grants, cash basis): Prog. -5.8 percent of GDP; Actual -5.7 percent of GDP.
  - Financing: Prog. 5.8 percent of GDP; Actual 5.7 percent of GDP.
  - Foreign financing (net): Prog. 5.0 percent of GDP; Actual 5.2 percent of GDP.
- Authorities allowed an increase in accounts payable (float) by 0.9 percentage points of GDP as a temporary solution; about one-third of the float was cleared by previously-anticipated disbursements early in FY19/20.
- Domestic liquidity pressures increased interbank market activity; interbank rates rose above the policy rate and the central bank engaged in reverse repurchase operations.
- Monetary policy developments:
  - The MPC reduced the policy rate by 50 basis points in May 2019.
  - The MPC left the policy rate unchanged in August and November 2019.
  - Private sector credit growth was 20.1 percent y/y as of September 2019.
- Financial soundness and sectoral indicators:
  - Banking system aggregate NPL ratio fell to 5.6 percent in 2019.
  - Liquidity ratios declined but remained above regulatory minima.
  - Microfinance asset quality improved amid rapid lending.
  - Insurance sector solvent and gradually more profitable, though costs remain high and penetration low.
- External sector:
  - Trade deficit increased by about 30 percent in the first three quarters of 2019.
  - Price declines in traditional exports (tea, coffee, minerals) weighed on export growth; non-traditional exports rose.
  - Trade balance with EAC countries improved significantly.
  - Rwandan franc depreciated by 4.7 percent y/y against the US$ at end-October 2019 (1.2 percent in REER terms).
  - International reserves remained at 4 months of prospective imports as of end-October 2019.

### Outlook and risks
- Growth projections and revisions:
  - Projected growth for 2019 was revised up from 7.8 to 8.5 percent.
  - The 2020 growth projection is maintained at 8.0 percent.
- Inflation and deflators:
  - Despite an end-2019 uptick in inflation, average inflation for 2019 was revised downward along with the terms of trade and the GDP deflator.
- Current account and reserves:
  - Current account deterioration in 2019 was somewhat greater than expected.
  - Gross international reserves projected around 4.4–4.9 months of imports in related projections.
- Risk assessment:
  - Downside risks: fuel prices, regional issues, unpredictable weather.
  - Upside risks: continuation of strong private investment, more regional trade, growth payoffs from large public investment projects.
- Program performance:
  - First PCI review: all but one end-June and continuous quantitative and structural reform targets were met.
  - The 12-month average for y/y headline inflation was below the lower bound of the MPCC in June 2019, triggering a required consultation with the IMF Executive Board.

### Program discussions — Fiscal policy: supporting NST while maintaining sustainability
- Program pillars discussed:
  1. Neutral medium-term fiscal policy stance providing space to implement the National Strategy for Transformation (NST) while safeguarding debt sustainability.
  2. Regaining momentum of domestic revenue mobilization.
  3. Improving fiscal transparency, including systematic identification, assessment, and management of potential fiscal risks.
  4. Supporting the BNR’s new interest rate-based monetary policy framework.
- FY19/20 fiscal adjustments and financing:
  - The government plans to reduce the float accrued in FY18/19 in the second half of FY19/20.
  - Staff agreed with authorities’ proposal to clear the remaining overhang with new external borrowing of up to 0.6 percentage points of GDP to avoid crowding out the private sector.
  - If higher-than-expected concessional disbursements materialize later in FY19/20, existing debt would be refinanced to keep the agreed FY19/20 deficit unchanged.
  - To avoid future deviations, the government will require more planning for conditionality at line ministries and instituted ongoing donor monitoring.
- FY19/20 fiscal stance changes:
  - The programmed FY19/20 deficit will increase from 5.7 to 6.2 percent of GDP.
    - Drivers: additional domestic interest payments (0.3 ppt of GDP), additional domestically-financed investment spending and net lending (0.4 ppt of GDP), and lower projected nominal GDP.
    - Offsets: higher projected tax revenues (0.4 ppt of GDP) related to stronger growth and administrative gains.
  - The program fiscal rule: a 5-year average program deficit ceiling of 5.5 percent of GDP; modest fiscal consolidation in outer years is envisaged to maintain consistency.
- Debate on fiscal rule and risk management:
  - Authorities argued the 5.5 percent of GDP rule unduly constrains frontloading of public investment; they preferred increasing the ceiling to 6 percent of GDP.
  - Staff recommended maintaining the higher precautionary buffer for the time being pending:
    - an updated DSA confirming continued low risk of debt distress;
    - results of a draft fiscal risk statement;
    - commencement of a fiscal risk registry;
    - commitments for an annual fiscal risk statement to parliament and a consolidated financial balance sheet of the non-financial public sector.
  - Staff proposed modifying the definition of the program deficit and fiscal rule to avoid “double-counting” of debt arising from GFSM 2014 treatment of a triggered government guarantee (0.8 percent of GDP stock operation) — specifically, using a “debt-creating overall balance” that excludes liabilities already included in the DSA that are moved to the budget, while continuing to include additional debt service obligations and net UN PKO operations in debt metrics.

### Program discussions — Domestic revenue mobilization and fiscal transparency
- Revenue mobilization commitments:
  - Program commitments to increase tax revenues by 0.2 percentage points of GDP annually.
  - Authorities requested IMF TA to develop a Medium-Term Revenue Strategy (MTRS).
- Measures underway (Box 1):
  - Costing and streamlining tax incentives:
    - New tax expenditure report published as part of the FY19/20 budget (end-June 2019 RT) revealed total tax expenditures in FY 17/18 at about 2.5 percent of GDP, with VAT exemptions accounting for about 60 percent of the total.
    - Authorities are evaluating options to better target existing incentive schemes.
  - Improving tax compliance — Rwandan Revenue Authority (RRA) actions:
    - Implementing recommendations from a second TADAT requested in 2019.
    - On track to meet end-December reform targets to produce a report on VAT compliance options and to automate a risk-based verification process for refund claims.
    - Boosting registration using other government databases; number of taxpayers increased by 12 percent in FY18/19.
    - Expanding use of electronic billing machine (EBM) software to provide real-time VAT transaction information to RRA.
    - Using SMS reminders for filing and payment obligations.
    - Linking EBM and customs declarations to E-tax systems to detect underreporting.
    - Promoting voluntary VAT compliance via increasing “lottery” schemes to incentivize customers to request invoices.
- Fiscal transparency and risk management:
  - Authorities and staff agreed the fiscal rule could be revisited following progress on systematically identifying, assessing, and managing fiscal risks.
  - Staff suggested key considerations for reconsidering the fiscal rule at the next review:
    - Updated DSA showing continued low risk of debt distress.
    - Results of a draft fiscal risk statement.
    - Commencement of a fiscal risk registry.
    - Longer-term program commitments for an annual fiscal risk statement to parliament and a consolidated non-financial public sector financial balance sheet.

*Source: IMF staff report excerpt (1rwaea2020001 - 2019).*

### 16.      The government has made steady progress in improving fiscal transparency. This

### 1rwaea2020001 - 16.      The government has made steady progress in improving fiscal transparency. This

### Fiscal transparency, reporting, and balance sheet compilation
- Migration to the GFSM 2014 framework for quarterly reporting is on track.
  - A budget execution report for the first quarter of FY19/20 is expected to be produced by end-December using GFSM 2014 (end-December 2019 RT), after mapping RRA’s reporting into GFSM categories.
  - Expanding the coverage of GFSM 2014 reporting (end-December 2020 RT): plans to include local government revenues into the current IFMIS to improve timeliness of reporting; extra-budgetary units can be included ultimately (requires dealing with spending from own revenues in IFMIS).
  - Government plans to collect information needed for quarterly reporting of general government activities (excluding RSSB), starting in FY20/21.
- Publish audit opinions: authorities committed to publish audit opinions of the financial statements of the budgetary central and local governments, starting with FY18/19.
- Compilation of a financial balance sheet for the nonfinancial public sector:
  - Annual consolidated financial statement currently includes stocks of cash and cash equivalents, account payables, and receivables.
  - Planned broadening to include equity and loan assets and debt and loan liabilities.
  - Once quarterly information on general government is available, a comprehensive financial balance sheet can be compiled.
- Staff recommendation: transitioning forecasting to the new format could require additional resources.

*Source: IMF staff text (Box 2 and main text on fiscal transparency).*

### Fiscal risk identification and management
- Roadmap agreed for identifying, assessing, and managing existing fiscal risks, while avoiding any new risks for the government balance sheet.
  - Preliminary fiscal risk statement produced, with AFRITAC East TA support.
  - Government hopes to set up a fiscal risk committee by spring to review the statement and start compiling a registry, enabling an annual fiscal risk statement.
  - The consolidated balance sheet plus the fiscal risk statement could be included as longer-term program commitments.
- De-risking objective: to avoid taking new financial risks on the public balance sheet, government is proactively using de-risking mechanisms to leverage more private finance for targeted priority investments (e.g., affordable housing and water).

*Source: IMF staff text (paras 17).*

### RSSB reforms and sustainability challenges
- RSSB (Rwanda Social Security Board) characteristics:
  - Largest financial entity in the country; runs six insurance schemes.
  - Fully government-owned but operated off-budget; receives earmarked donor support for health insurance costs.
- RSSB main challenges and reform actions:
  - IT modernization: an IT system has been procured (end-June 2019 RT) to update paper-based systems and improve reporting, transparency, and fraud detection.
  - Addressing financial pressures from expiring official grants: RSSB recommends measures to improve cost efficiency and administrative efficiency and increase burden-sharing by beneficiaries.
  - Make each insurance scheme self-sustaining: RSSB intends to ring-fence schemes for self-sustainability; will require improving asset allocation, particularly for the pension scheme (end-June 2020 RT).

*Source: IMF staff text (para 18).*

### Monetary policy stance and implementation
- Monetary policy stance:
  - Staff and authorities agree the BNR’s stance is appropriate.
  - BNR target: 5.0 percent (target referenced explicitly).
  - BNR actions: cut rates at the trough in May and kept rates on hold in August as inflation began to rise toward the BNR’s target.
  - Staff and authorities expect inflation to rise modestly above the target in 2020 before falling back toward the target.
- Inflation and growth statistics:
  - Headline inflation was below the BNR’s target between June 2017 and June 2019, averaging 1.9 percent y/y over this period.
  - Core inflation averaged 2.8 percent y/y over this period.
  - Quarterly real GDP growth has averaged 8.0 percent since 2017.
  - Core inflation averaged 2.9 percent y/y in H1 2019.
- Recommendation: BNR should continue to closely monitor price developments amid continued strong economic growth and bank lending and stand ready to take action should inflation trends deviate from expectations.

*Source: IMF staff text and Box 3.*

### Transition to an interest rate-based operational framework and liquidity management
- Progress and actions:
  - BNR reduced excess bank reserves in early 2019, increased banks’ use of the interbank market, and injected liquidity amid pressures in the second half of 2019—important steps for an interest rate-based framework.
  - Lending rates began to roughly track the policy rate since late 2018.
  - BNR is upgrading post-MPC meeting communications strategy (end-December 2019 RT), aided by TA.
- Remaining challenges:
  - Banks continue to prefer precautionary reserve buffers, indicating the need for further financial market refinements.
  - Developing a monetary transmission mechanism requires deeper short-term money markets; interbank market historically shallow and stigmatized.
- Liquidity management measures under way or proposed:
  - Enhancement of the repo framework and draining of excess reserves before July led to rising interbank volumes in early 2019.
  - Use of reverse repos to meet banks’ liquidity demands amid July–September 2019 pressures signaled an additional liquidity source.
  - Planned upgrades: allow change of ownership during repos (rather than collateralized with pledge); legal provisions allowing netting repos in insolvency; deepen secondary market (introduce primary dealer system; increase retail investor opportunities); tax incentives to lengthen bank deposit tenors; promote greater use of new electronic interbank trading platform; extend banks’ reserve maintenance period from two weeks to four or five weeks.

*Source: IMF staff text and Box 4.*

### Exchange rate policy and external buffers
- Policy stance:
  - Market-determined exchange rate considered an important element of the interest rate-based framework.
  - FX market interventions should be limited to minimizing excessive exchange rate volatility.
  - BNR continues to intermediate FX given significant ODA flows, underdeveloped private market, and allocation inefficiency.
- External buffer metric:
  - Current level of FX reserve coverage is 4.0 months of next year’s imports (explicit figure preserved).

*Source: IMF staff text (para 21).*

### Financial stability, development, and inclusion
- Financial sector developments and metrics:
  - Introduction of Basel II/III capital requirements and start of IFRS 9 implementation have not materially impacted intermediation.
  - Bank credit growth: 20 percent y/y as of September.
- Regulatory and macroprudential steps:
  - Introduction of loan-to-value ratios for real estate lending.
  - Steps toward establishing a capital framework for domestic systemically-important banks (D-SIBs).
  - New investment and governance guidelines for banks.
- Financial development and inclusion program:
  - Includes long term savings schemes, domestic de-risking schemes, fintech to improve services for agriculture, and move toward a “cashless” economy via mobile technology.
  - BNR established a “regulatory sandbox” for fintech products.

*Source: IMF staff text (paras 22–23).*

### Structural policies: NST1 objectives, financing, and private investment
- National Strategy for Transformation (NST1) overview:
  - NST1 aims to meet the Sustainable Development Goals; financing is challenging given limited domestic revenue potential.
  - At current income levels, limited scope for additional domestic revenue mobilization, perhaps 2–3 ppt of GDP.
  - Staff estimates total spending needs to rise to as much as 20 ppts of 2030 GDP.
  - ODA has continued to trend downward; private financing contribution is critical.
- De-risking and private investment:
  - Government seeks to attract private investment using de-risking instruments to target priority development areas (e.g., affordable housing).
- Policies to create jobs and diversify exports:
  - Interventions include consolidating artisanal miners, training agricultural workers in export sectors, marketing Rwandan products externally, upgrading manufacturing technology/processes, enhancing food quality standards, and investment in value addition for processed minerals.
  - Innovation and digital literacy efforts: more R&D, rural training, innovative electronic platforms for basic government services; a new mobile money platform is being piloted among rural farmers.
- Public investment to reduce transport costs:
  - Investment in a large-scale inland cargo handling facility (“dry port”) in Kigali; container turnaround and overall transport and storage costs declined since operations began.
  - RwandAir expanded cargo activities to meet exporter demand.
- Private investment outcomes:
  - Rwandan Development Board reports substantial new FDI in tourism, construction materials, irrigation, and light manufacturing.
  - Examples visited by staff include VW Rwanda assembly plant (joined with Siemens to launch electric cars), Mara Phones, and Sorwathe Tea plantation.

*Source: IMF staff text (paras 24–27).*

### NST1 financing specifics (Box 5)
- NST1 timeline and pillars:
  - Phase I covers 2017–24; built around three pillars: economic transformation, social transformation, and transformational governance.
- Costing and financing shares and targets:
  - At US$39.2 billion, the cost of NST1 is expected to be shared at 59:41 percent, respectively, between the government and the private sector.
  - Public resources should mainly come from improved revenue collection, combined with around RWF3.7 trillion of external financing (mainly loans).
  - FDI should account for about half of private resources.
  - Authorities aim to use “de-risking” ODA to leverage private resources while avoiding assuming further financial risks on the government balance sheet.

*Source: IMF staff text (Box 5).*

### Program modalities and selected fiscal metrics
- Quantitative and reform targets:
  - Staff proposes modest changes in the end-December 2019 and end-June 2020 fiscal deficit and NFA targets (PS, Table 1), reflecting revised timing of ODA flows.
  - The definition of the deficit target will be modified to align with the fiscal rule concept of a non-debt creating deficit.
- Sectoral financing composition (explicit shares presented in source):
  - 2016/17: 36% Tax revenue; 6% Non-tax revenue; 11% Total grants; 1% Net Domestic Financing; 11% Net Foreign Financing; 16% Foreign private investment; 19% Domestic private investment.
  - 2023/24: 38% Tax revenue; 5% Non-tax revenue; 5% Total grants; 1% Net Domestic Financing; 7% Net Foreign Financing; 17% Foreign private investment; 28% Domestic private investment.

*Source: IMF staff text (paras 28 and associated graphic).*

*Italic: Source — IMF Country Report text as provided in the supplied PDF content unit.*

### 29.      Debt Sustainability Analysis (DSA). The DSA has not been updated since the PCI program

### 1rwaea2020001 - 29.      Debt Sustainability Analysis (DSA). The DSA has not been updated since the PCI program

### Debt Sustainability Analysis (DSA)
- The DSA has not been updated since the PCI program request in June 2019, at which time the risk of debt distress was assessed to be low.
- Bank and Fund staffs have agreed to undertake a DSA update prior to the next program review.
- Footnote: External borrowing referred to in ¶11 would have a maximum impact on the debt stock of 0.6 percent of GDP, therefore a minimal impact on the DSA would be expected.

### Capacity Development
- Rwanda is an intensive consumer of IMF TA and has a strong track record of implementation, resulting in consistent, tangible progress in building capacity.
- TA areas and notable achievements:
  - PFM, inflation forecasting, debt sustainability, tax policy and administration, national accounts, and financial stability.
  - Transition to SDDS by end-2019.
  - Work with AFRITAC East to develop self-administered courses in financial programming.

### Staff Appraisal — macroeconomic and fiscal management
- Commitment and vulnerabilities:
  - Rwanda continues to show strong commitment to development priorities and maintaining macroeconomic stability.
  - Deviations between realized and planned ODA flows exposed vulnerabilities; triggering of a large guarantee reveals the importance of more actively managing existing fiscal risks.
  - The government is working to mitigate vulnerabilities by enhancing fiscal transparency and better identifying, assessing, and managing fiscal risks.
- Fiscal rule and fiscal risks:
  - The current program fiscal rule provides a substantial buffer, specifically designed to guard against the emergence of fiscal risks.
  - Additional progress in systematically identifying, assessing, and managing fiscal risks would provide critical information on the magnitude of potential risks and enable an assessment of the scope to reduce the buffer in the fiscal rule.
  - Staff and the authorities are crafting a balanced policy stance to maximize opportunities to implement the NST/SDGs while safeguarding fiscal and debt sustainability.
  - Continued efforts to increase tax revenue will provide additional space.
- Monetary policy and financial sector:
  - Despite the MPCC trigger, implementation of the new monetary policy operational framework is proceeding well, and the current monetary stance is appropriate.
  - Based on inflation projections and other indicators, staff agrees with the MPC’s decision not to loosen the policy rate further after May.
  - Staff welcomes the BNR’s commitment to take further action should trends deviate from expectations.
  - Responses to domestic liquidity pressures strengthened the credibility of the interbank market and BNR tools; this should reduce banks’ reliance on excess reserves and strengthen transmission to lending rates.
  - Extensive work on financial stability and inclusion, including with non-bank financial institutions, is strengthening the role of the financial sector in supporting development.
- Meeting NST/SDGs and mobilizing resources:
  - In light of limited scope to raise domestic resources, meeting the NST/SDGs will require new approaches.
  - Authorities have actively sought new FDI, including via the CWA, supporting growth, employment, and domestic revenues.
  - Directing private resources into priority areas with longer-term payoffs, such as affordable housing, infrastructure, education, and health, is more challenging.
  - Staff welcomes the government’s efforts to find creative solutions, including leveraging scarce ODA by de-risking private financial inflows, while avoiding assuming new financial risks on the government balance sheet.

*Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1rwaea2020001.pdf*

### 35.       Staff supports the completion of the first review under the PCI.

### 35.       Staff supports the completion of the first review under the PCI.

### Overview of Recent Economic Developments
- Growth was "stronger than expected in the first half of 2019" with leading indicators pointing to continued strength.
- Pronounced contributions to GDP growth from construction and services (Contribution to GDP Growth chart; percent, y/y).
- Headline inflation is picking up due to food prices; CPI (period average) and CPI (end period) figures in Table 1:  
  - CPI (period average): 1.4, 3.5, 2.3, 5.0, 5.4, 5.0, 5.0  
  - CPI (end period): 1.1, 5.0, 5.7, 5.0, 5.0, 5.0, 5.0
- Trade deficit increased due to higher imports, especially for construction; exports and imports (USD millions, 3-mo rolling avg) show rising imports.

### Fiscal Developments and Outcomes
- Fiscal deficit rose due to higher PKO and project spending and lower ODA, but remains within the adjusted program ceiling (text summary).
- Key fiscal aggregates from Table 1 (percent of GDP unless otherwise indicated):  
  - Total revenue and grants: 24.1, 23.1, 23.6, 22.2, 23.1, 21.6, 22.9  
  - Taxes (of which tax revenue): 16.2, 16.1, 16.6, 16.3, 16.9, 16.1, 16.5  
  - Grants: 4.9, 4.8, 4.5, 3.9, 4.1, 3.4, 4.3  
  - Expenditure: 28.8, 29.2, 31.9, 28.6, 29.0, 27.8, 29.2  
  - Overall balance: -4.7, -6.1, -8.2, -6.4, -5.9, -6.2, -6.3  
  - Overall balance excluding grants: -9.6, -10.9, -12.7, -10.4, -10.0, -9.6, -10.6
- Table 2a–2d detail budgetary central government flows (GFSM 2014 presentation) and FY aggregates:
  - Revenue and grants (billions of RwF): 1,820; projected path through FY2021/22 up to 2,848.
  - Total expenditure and net lending (billions of RwF): 2,188; projected path through FY2021/22 up to 3,516.
  - Net lending / borrowing (overall balance) including grants (billions of RwF): -345.3, -476.2, -516.5, -588.1, -587.1, -612.6, -606.3, -658.3, -663.2.
  - Overall balance (incl. grants, commitment basis) as percent of GDP: -4.7, -5.5, -6.3, -6.0, -7.1, -5.5, -5.6, -5.2, -5.4 (Table 2d).
- Fiscal drivers called out: lower-than-anticipated budget grants; higher-than-expected peace-keeping (PKO) and project spending.

### Monetary Developments
- Rwanda experienced a sizeable shortfall in budget support grants in the year (Budget Support grants: planned vs actual, USD millions; chart note).
- Domestic liquidity pressures increased, spurring interbank market activity and rates; interbank volume and rate show rising rates and volumes (Interbank Volume and Rate: RWF billions and percent).
- BNR liquidity injections (reverse repo transactions, RWF billions) helped ease liquidity pressures and met banks' preference for holding excess reserves.
- Money and credit (Table 3, year-on-year growth, percent):  
  - Broad money (M3) growth: 15.6, 19.8, 21.8, 20.0, 21.9, 17.7, 17.4  
  - Reserve money growth: 16.1, 17.2, 21.5, 17.9, 22.1, 15.7, 17.8  
  - Credit to non-government sector: 10.8, 12.8, 17.6, 14.3, 14.8, 13.9, 7.9  
- Monetary aggregates (billions of RwF, Table 3 snapshots): Broad money levels and monetary survey items reported through Dec/Jun/Dec (2018–2021 series).

### External Developments and Reserves
- Low relative inflation led to rapid real depreciation against EAC peers (EAC Real Effective Exchange Rates indexed, March 2013=100).
- Nominal exchange rate continued to depreciate steadily; international reserves were drawn down leading to lower months-of-imports coverage (International reserves in millions of US$): 1,319, 1,428, 1,367, 1,566, 1,553, 1,637, 1,654 (Table 4 series).
- Balance of payments (Table 4, millions of US$):  
  - Current account balance (incl. official transfers): -746, -975, -1,068, -1,038, -1,077, -956, -1,077  
  - Trade balance: -915, -1,044, -1,154, -1,031, -1,202, -997, -1,286  
  - Exports (f.o.b.): 1,126, 1,218, 1,171, 1,327, 1,298, 1,481, 1,458  
  - Imports (f.o.b.): 2,041, 2,261, 2,325, 2,357, 2,499, 2,478, 2,744  
  - Tourism receipts (component of services credit): 374.9, 404.0, 404.9, 444.4, 445.4, 511.0, 512.2  
  - Gross official reserves (millions of US$): 1,319, 1,428, 1,367, 1,566, 1,553, 1,637, 1,654  
  - Current account deficit (percent of GDP): -7.9, -9.6, -10.6, -9.4, -9.9, -7.9, -9.1

### Selected Economic Indicators (Table 1 key projections and prels)
- Output and prices (annual percent changes and levels):  
  - Real GDP: 8.6, 7.8, 8.5, 8.1, 8.0, 8.2, 8.0  
  - GDP deflator: -0.8, 4.2, 1.8, 5.0, 5.6, 5.0, 5.0  
  - Terms of trade (deterioration, -): -0.7, 0.7, -1.8, 0.1, -0.1, 0.2, 0.0
- Public debt indicators (percent of GDP, Table 1):  
  - Total public debt incl. guarantees: 53.1, 55.8, 59.0, 57.3, 58.9, 58.2, 59.8  
  - PV of total public debt incl. guarantees: 40.9, 42.5, 44.5, 42.9, 43.1, 42.7, 42.9
- External sector (percent of GDP, Table 1):  
  - Exports (goods and services): 21.5, 21.2, 21.5, 21.4, 21.8, 22.1, 22.6  
  - Imports (goods and services): 33.1, 33.6, 34.9, 32.8, 34.1, 31.8, 34.3

### Financial Sector Soundness
- Financial Soundness Indicators (Table 5, Sep 2017 – Jun 2019): selected series (percent):  
  - Regulatory capital to risk-weighted assets: 20.5, 20.0, 19.5, 20.1, 20.8, 23.8, 22.4, 21.8  
  - NPLs/gross loans: 7.7, 7.6, 6.8, 6.9, 7.2, 6.4, 6.3, 5.6  
  - Return on average assets: 1.6, 1.1, 1.3, 1.6, 1.7, 1.9, 2.1, 1.6  
  - Liquid assets/total deposits and gross loans/total deposits series reported; forex exposure/core capital and forex loans/Forex deposits also reported.

### Program Targets and Reform Monitoring
- The document includes Table 6 (Quantitative Program Targets under PCI-Supported Program as of End-June 2019) and Table 7 (Reform Targets Under PCI-Supported Program as of End-June 2019) indicating monitoring of half-yearly quantitative targets and reform adjustors (tables referenced; detailed entries contained in the original tables).

*Source: Rwandan authorities and IMF staff estimates and projections (content unit: 35. Staff supports the completion of the first review under the PCI).*

### 1. Ceiling on the overall deficit, including grants

### 1. Ceiling on the overall deficit, including grants

### Quantitative targets, performance, and memorandum items
- Continuous targets and end-June 2019 status:
  - 1. Ceiling on the overall deficit, including grants: 2 Met
  - 2. Floor on stock of Net Foreign Assets: 850-90760825 Met
  - 3. Ceiling on net accumulation of domestic arrears: 0-2.7 Met
  - 4. Ceiling on stock of external payment arrears (US$ millions) (Continuous Targets): 3 0...0 Met
- Monetary Policy Consultation Band (MPCC) and inflation bounds (when end-of-period year-on-year average inflation is outside band a formal consultation is triggered):
  - CPI Inflation target: 5.00.8 Not Met
  - Inflation, upper inner-bound, percent: 8.0
  - Inflation, lower inner-bound, percent: 2.0
  - Inflation, upper bound, percent: 9.0
  - Inflation, lower bound, percent: 1.0
- Memorandum items:
  - Total priority spending: 2 812827 Met
  - Floor on domestic revenue collection: 2,5 1,5841,519 Not Met
  - Stock of new external debt contracted or guaranteed by nonfinancial public enterprises (US$ millions): 700475 Met
  - Total budget support (US$ millions): 2 664566
  - Budget support grants (US$ millions): 365295
  - Budget support loans (US$ millions): 299271
  - RWF/US$ program exchange rate: 879879
- Notes:
  - Sources: Rwandan authorities and IMF staff estimates and projections.
  - All items including adjusters are defined in the Technical Memorandum of Understanding (TMU).
  - Numbers for June 2019 are cumulative from 6/30/2018.
  - Continuous targets.
  - When the end-of period year-on-year average inflation is above/below the outer band of the upper/lower bound, a formal consultation with the Executive Board would be triggered.
  - The target inadvertently and incorrectly included PKO reimbursements. Had the target floor excluded PKO reimbursements, in line with the TMU, it would have been met.
  - end-June 2019.

### Program actions and structural benchmarks (status as of end-June 2019)
- Fiscal structural actions:
  - Produce annual tax expenditure report with updated methodology, and a description of broad categories of beneficiaries. Target date: end-June 2019. Status: Met
  - Procure an IT system that will capture all RSSB processes. Target date: end-June 2019. Status: Met
  - Source: Rwandan authorities.

### Key recent macroeconomic developments (first half/2019 and June/2019 observations)
- Growth and demand:
  - Economic growth averaged 10.3 percent during the first half of 2019; growth reached 12.2 percent in Q2 2019.
  - Wholesale and retail trade grew by 23 percent; transport grew by 17 percent.
  - Investment grew at 40 percent in the first half of 2019 and was the main demand driver.
- Fiscal execution and financing:
  - External loan-financed project execution improved; budget grants and loans disbursements were lower than projected.
  - On a commitment basis, fiscal deficit estimated at 6.4 percent of GDP; on a cash basis the deficit was lower due to delayed/cancelled donor budget support funds.
  - A financing gap from FY 2018/19 was carried forward to FY 2019/20.
- Inflation and monetary policy:
  - In May 2019, twelve-month average CPI inflation went below 1 percent, below the MPCC lower bound.
  - Headline inflation decreased since July 2018 driven by deflationary pressures in domestic food and energy (charcoal and firewood) and imported food.
  - In May 2019 the Monetary Policy Committee cut the central bank rate to an all-time low of 5 percent.
  - Since June 2019, core inflation started to pick up.
- Money and credit:
  - Growth of the most liquid assets in Rwandan francs reduced by 1.8 percent (y-o-y) as of June 2019, versus 22.8 percent a year earlier.
  - Broad money (M3) grew by 14.0 percent in the year ending June 2019, up from 9.6 percent end June 2018.
  - Net domestic assets increased by 13 percent; net foreign assets expanded by 15 percent.
  - Outstanding credit to the private sector grew by 18 percent end June 2019, compared to 7 percent end June 2018.
  - Currency in circulation increased by 11 percent; currency in circulation to broad money ratio around 9 percent on average (last three years ending June 2019).
  - Total deposits in the banking system picked up by 14 percent as of June 2019; demand deposits surged by 18 percent from 3 percent during the same period.
- Banking and nonbank financial sectors:
  - Banking sector lending: outstanding loans increased by 18.4 percent (y-o-y) in September 2019, versus 9 percent in September 2018.
  - Banking sector capital and liquidity buffers:
    - Total Capital Adequacy Ratio (CAR) at 23.7 percent as at September 2019 (minimum 15 percent).
    - Liquidity Coverage Ratio (LCR) at 193 percent as at end September 2019 (minimum 100 percent).
  - Non-performing loans (NPLs) ratio declined from 7.2 percent in September 2018 to 5.3 percent in September 2019.
  - Private insurers solvency improved from -53 percent in June 2016 to 188 percent in September 2019 (prudential minimum 100 percent); insurers still register underwriting losses.
  - Microfinance institutions (MFI) sector: CAR at 35.3 percent as of September 2019 (minimum 15 percent); liquidity ratio at 87.8 percent (prudential limit 30 percent).
- External sector:
  - Exports of goods and services rose by 8 percent year-on-year in 2019 H1 (services +15 percent; merchandise +3 percent).
  - Balance of payments: BOP recorded a deficit of USD 70 million in 2019H1; reserves in months of imports decreased from 4.5 months in 2018 to 4.3 months.
  - Total net foreign liabilities (FDI, portfolio investment and other investments) decreased by 26 percent in 2019H1, largely due to delayed disbursement of public borrowings.

### Outlook and fiscal policy stance
- Growth projections:
  - GDP growth forecast revised upward from 7.8 to 8.5 percent in 2019.
  - Medium-term growth projection: 8 percent.
- Fiscal outlook and adjustments:
  - Fiscal projections for 2019/20 reflect additional spending, repayment of domestic and external debt, and additional external borrowing to clear the FY 2018/19 float.
  - A government-guaranteed bank loan was called and enters fiscal accounts for the first time; this loan was included in Debt Sustainability Analysis but excluded from the program deficit definition (along with Peace keeping Operations financing) to consider only debt-creating flows.
  - Government seeking external funding to close the financing gap from delayed/cancelled external donor budget support in FY 18/19.
  - Commitment to respect agreed deficit in line with the planned resource envelope.
- Fiscal transparency and monitoring:
  - Strengthening disbursement monitoring via engagement with implementing agencies and development partners.
  - Projections of grants and loans for 2019/20 based on prior actions certain to be achieved; ensure DLIs, triggers and policy actions are reflected in plans and budgets of ministries and agencies.
  - Economic and social clusters will have ongoing discussions on DLIs, triggers and policy actions.
  - Commitment to publish audit opinion of consolidated financial statements of general government starting with FY 19/20.
- Debt policy and request to IMF:
  - Government committed to maintain prudent debt levels; fiscal anchor under the PCI program: a 5.5 percent of GDP overall deficit on a 5-year rolling average basis with a larger safety margin.
  - Government requests relaxation of the 5-year rolling average fiscal deficit target from 5.5 percent of GDP to 6 percent of GDP during the next review.
  - Preparations underway for a preliminary fiscal risks statement with IMF assistance to estimate plausible fiscal costs and build precautionary buffers.
  - Conditions listed for revisiting the fiscal rule ceiling at the next review:
    - An updated DSA showing Rwanda remains at low risk of debt distress;
    - A draft fiscal risk statement considered by a fiscal risk committee;
    - Commencing work on a fiscal risk registry;
    - Longer-term commitments in the program for an annual fiscal risk statement submitted to parliament and producing a non-financial public sector balance sheet.

*Source: Rwandan authorities and IMF staff estimates and projections (Material in Attachment I: Program Statement and related text as provided).*

### 20.      Our medium-term fiscal policies will continue to reflect fiscal consolidation and

### 20.      Our medium-term fiscal policies will continue to reflect fiscal consolidation and

### Fiscal framework and medium-term projections
- Domestic revenue is the key funding source for future spending; ongoing tax policy and tax administration measures are expected to produce results.
- Tax-to-GDP ratio:
  - Estimated at 16.4 percent of GDP in 2019/20.
  - Expected to increase by 0.2 percent of GDP every year over the medium term.
- Expenditure composition:
  - Current expenditure will remain contained at 15 percent of GDP and below in the medium-term.
  - Capital expenditure maintained at 12 percent of GDP over the medium-term to implement NST 1 priority projects.
- Non-debt creating fiscal deficit projection:
  - Projected at 5.5 percent of GDP in 2019/20 and 2020/21.
  - Declining to 5.3 percent of GDP in 2021/22.
- Policy objective: Respect the current fiscal rule under the program.

### Public and publicly guaranteed debt management
- Debt sustainability assessment (March 2019, Fund and Bank joint DSA):
  - Present value of external debt at end 2018: 29 Per cent of GDP (threshold 55 Percent of GDP).
  - Present value higher than 27.9 Per cent of GDP recorded in 2017.
- Debt stock (nominal terms):
  - Total public and publicly guaranteed debt stock amounted 55.3 percent of GDP as of end June 2019.
  - Compared to 53.1 percent of GDP at end December 2018.
- Debt composition:
  - External concessional loans constitute 63 percent of total debt.
- Government’s medium-term debt strategy aims to:
  - Maintain the low risk status while financing development projects through prioritizing concessional debt.
  - Support domestic market development with issuance of long-term debt securities in replacement of short-term debt securities.
  - Mitigate risks associated with contingent liabilities.
- Expected outcomes of debt strategy:
  - Finance public investment that translates into economic growth, increased domestic revenues, enhanced export performance, and build-up of international reserves, enhancing capacity to service and repay debt.
- Government action: Regularly conducting DSAs to gauge debt trends.

### Revenue administration reforms and targets
- Commitment: Strengthen revenue administration to secure full compliance by all taxpayers and improve taxpayer services.
- Administrative improvements and results:
  - Use of third party information through interfacing and crosschecking with other sectors (Rwanda Development Board, Private Sector Federation, Rwanda Government Board, Rwanda Public Procurement Authority etc.) and internal IT systems for data matching to identify potential taxpayers.
    - Number of registered taxpayers during 2018/19 fiscal year increased by 12 percent.
  - Electronic Billing Machines (EBM):
    - Total VAT registered taxpayers as of end June 2019: 24,022.
    - 22,247 expected to have EBM.
    - 20,987 taxpayers had acquired EBM, acquisition ratio of 94.3 percent.
    - Remaining VAT registered taxpayers without EBM: 1,260 (equivalent to 5.7 percent).
  - IT system enhancements to detect tax evasion and increase compliance:
    - E-Tax and EBM VAT output validation controls implemented since December 2018 to validate sales in returns against EBM-reported sales; system notifies taxpayers of discrepancies and captures the higher amount unless justified.
    - System controls to pre-fill income tax quarterly prepayments (IQP) implemented to prevent claiming wrong income tax advances; system automatically pre-fills amounts for taxpayer validation.
    - Interface between Domestic tax system (E-Tax) and Customs system (Electronic single window) developed to provide quick import service and safeguard revenue by detecting importers not registered for domestic taxes and other mismatches.
- Policy-level actions:
  - Initiation of a Medium-Term Revenue Strategy (MTRS) with IMF and development partners to identify key policies to boost tax collection.
  - Current analytical work on tax expenditure will inform the MTRS.
  - Administrative measures expected to yield increasing results over the medium term.
  - Commitment to identify and/or adjust policies as needed to achieve increasing tax revenues by 0.2 percentage points every year.

### Monetary and exchange rate policies
- Inflation outlook and policy rate:
  - 12-month average CPI inflation forecast to evolve to around 2.2 by end of 2019.
  - Based on forecasts, MPC decided to maintain the policy rate at 5.0 percent in August 2019.
  - MPC will stand ready to take appropriate monetary policy measures (including adjusting the policy rate) should forecast assumptions deviate.
- Current Account Deficit (CAD) projections:
  - Projected CAD: 10.6 percent of GDP in 2019 (1.0 percentage point upward revision from last projections).
  - Falling to 9.9 percent of GDP in 2020.
  - Falling to 9.1 percent of GDP in 2021.
- External outlook drivers:
  - Rebound of receipts from traditional exports as global demand weakness fades.
  - Continued strong regional demand of non-traditional exports and re-exports.
  - Decreasing deficit from services.
- Financing and reserves:
  - CAD will be financed by continued steady capital inflows due to stable macroeconomic environment, political stability and business enablement.
  - Official reserves in months of imports of goods & services expected to remain stable, averaging 4.5 months over 2019–21.
- Exchange rate regime:
  - BNR committed to maintain a market driven exchange rate regime in line with the monetary policy framework.
  - BNR will continue supplying foreign exchange to the market to satisfy demand related mostly to execution of infrastructure capital projects, but such sales are not aimed at controlling the value of the exchange rate.

### Financial sector policies and market development
- Regulatory instruments gazetted since March 2019 and other initiatives:
  - Directive on Loan to Value Ratio.
  - Regulation Governing the Shareholding, Acquisition and Amalgamation of Banks.
  - Regulation on Major Investment and Placements of Banks.
  - Insurance Sector Anti-fraud and Related Financial Crimes Forum.
  - Regulation on Minimum Internal Control and Audit for Banks.
  - Law Governing Credit Reporting System.
  - Law on Prevention and Punishment of Money Laundering and Terrorism Financing (AML/CFT Law).
  - Regulation Governing Non-Deposit Taking Financial Institutions (NDFIS).
  - Domestically Systemically Important Banks (DSIBs) Framework.
  - Regulation on Licensing Conditions for Banks and Insurers.
  - Regulation Governing the Micro-Insurance Organization.
  - The Directive on Risk Based Capital (RBC) Requirements.
- Market deepening and monetary transmission:
  - NBR committed to deepen financial markets and strengthen monetary policy transmission.
  - Reopening mechanism started in June 2018 to aid price discovery in the secondary market and provide liquidity.
  - 20 years government bond successfully issued in August 2019 to support capital market development and promote saving via government securities.
  - These initiatives increased volume and number of transactions on the secondary market at the stock exchange.
- Repo market reforms:
  - Steps to implement true repo to develop the interbank market, allowing safe and collateralized borrowing and lending with full ownership of collateral taken by lending bank until loan maturity.
  - Expected effects: reduce risk and cost of short-term transactions.
  - Rollout to be supplemented by Global Master Repurchase Agreement (GMRA).

### Program monitoring, targets, and reform actions
- Monitoring framework:
  - Progress monitored through quantitative targets (QTs), continuous targets (CTs), and reform targets (RTs); detailed in Tables 1 and 2 and TMU.
- Monetary policy framework and consultation:
  - January 2019: BNR adopted a price-based monetary policy framework with an explicit objective of maintaining inflation within a benchmark band of 5±3 percent.
  - March 2019: Rwanda requested a three-year Policy Coordination Instrument (PCI); under PCI, inflation benchmark for June 2019 monitored under a Monetary Policy Consultation Clause (MPCC).
  - Consultation with IMF staff follows BNR band of 5±3 percent; consultation with IMF Executive Board based on a wider band (5±4 percent).
- Inflation developments and MPC actions:
  - February 2019 BNR staff projections: CPI inflation slowing to 1.0 percent in 2019Q1 and 0.8 percent in 2019Q2; 12-month average CPI inflation about 1.0 by 2019Q2.
  - June 2019: twelve-month average CPI inflation slightly below 1 percent (outer bound), triggering requirement for consultation with IMF Board on reasons and proposed response.
  - From June to August 2019, 12-month average CPI inflation remained at 0.8 percent (0.2 percentage points below lower bound), before up-ticking to 1.0 percent in September 2018.
  - May 2019 MPC decided to cut central bank rate to 5 percent (all-time low) in response to deflationary pressures; August 2019 MPC maintained policy rate at 5.0 percent given forecasts.
- Table 1: Selected quantitative targets and program figures (as presented)
  - Ceiling on the debt-creating overall balance, including grants:
    - Prog. end-Dec 2019: -276
    - Rev. end-Dec 2019: -320
    - Prog. end-Jun 2020: -589
    - Rev. end-Jun 2020: -600
  - Floor on stock of Net Foreign Assets:
    - Prog. end-Dec 2019: 980
    - Rev. end-Dec 2019: 972
    - Prog. end-Jun 2020: 858
    - Rev. end-Jun 2020: 910
  - Ceiling on flow of net accumulation of domestic arrears: 0 0 0 0
  - Ceiling on stock of external payment arrears (US$ millions): 0 0 0 0 (Continuous Targets)
  - Monetary Policy Consultation Band (CPI Inflation target and bounds):
    - CPI Inflation target: 5.0 5.0 5.0 5.0
    - Inflation, upper inner-bound, percent: 8.0 8.0 8.0 8.0
    - Inflation, lower inner-bound, percent: 2.0 2.0 2.0 2.0
    - Inflation, upper bound, percent: 9.0 9.0 9.0 9.0
    - Inflation, lower bound, percent: 1.0 1.0 1.0 1.0
  - Memorandum items (selected):
    - Total priority spending: 411 411 885 885
    - Flow of domestic revenue collection: 823 779 1726 1678
    - Stock of new external nonconcessional debt: 700 700 700 700
    - Total budget support (US$ millions): 439 477 617 742
    - Budget support grants (US$ millions): 196 222 293 339
    - Budget support loans (US$ millions): 243 255 324 403
    - RWF/US$ program exchange rate: 879 923 879 923
  - Notes:
    - All items including adjusters are defined in the Technical Memorandum of Understanding (TMU).
    - Numbers are cumulative from June 30, 2019.
    - Continuous targets.
    - When end-of-period year-on-year average inflation is above/below the outer band of the upper/lower bound, a formal consultation with the Executive Board is triggered.
    - Floor on flow of domestic revenue collection is adjusted to exclude UN peace keeping operations, in line with the TMU.
- Table 2: Forward-Looking Reform Targets (selected actions and target dates)
  - Fiscal:
    - Produce a report outlining detailed options for improving functioning of VAT, including measures that could be implemented in FY20/21. — end-Dec 2019
    - Automating the risk based verification process for refund claims. — end-Dec 2019
    - Begin producing quarterly budget execution reports in GFS 2014 format. — end-Dec 2019
    - Produce a comprehensive fiscal risk analysis statement. — end-Jun 2020
    - Contract a diagnostic study on optimal RSSB asset allocation. — end-Jun 2020
    - Expand coverage in fiscal reporting in GFS 2014 from budgetary central govt to central govt and local governments. — end-Dec 2020
    - Produce financial and management reports from the IT system for all schemes managed by RSSB. — end-Dec 2020
  - Monetary and Financial:
    - Improve communication for monetary policy by organizing quarterly outreach after each MPC meeting, including roundtable discussions with CEOs of commercial banks and other financial institutions. — end-Dec 2019
    - Publish macro projections for MPC decision making in quarterly inflation reports. — end-Jun 2020
    - Introduce a platform for issuing government securities using mobile phones. — end-Jun 2020
    - Produce a study on consumer payment behavior analyzing micro-level data on consumer payment choices. — end-Dec 2020
    - Expand industrial and market expectation surveys, begin data collection for a purchasing manager's index, accelerate publication of foreign private capital survey. — end-Dec 2020
    - Update the regulatory framework on true repo to rollout Global Master Repurchase Agreement (GMRA). — end-Jun 2021

*Source: Rwandan authorities and IMF staff estimates and projections (excerpts from the referenced IMF document).*

### 1.      This memorandum defines the quantitative targets described in the Program

### 1rwaea2020001 - 1.      This memorandum defines the quantitative targets described in the Program

### Program scope and period
- Program period: July 1, 2019 –   June 30, 2020.
- Instrument: IMF Policy Coordination Instrument (PCI).
- Program exchange rates (from December 31, 2019; US$ per currency unit, unless indicated otherwise):
  - Rwanda Franc (per US$) 923.1
  - Euro 1,024.6
  - British Pound 1,190.8
  - Japanese Yen (per US$) 107.0
  - SDR 1,273.9

### A. Quantitative Program Targets — Overview
- Targets apply to test dates including December 31, 2019 and June 30, 2020, measured cumulatively from June 30, 2019 (except where otherwise noted).
- Major quantitative targets:
  - Ceiling on the debt-creating overall fiscal balance of the budgetary central government (excluding Peace-Keeping Operations and including grants).
  - Floor on Net Foreign Assets (NFA) of the National Bank of Rwanda (NBR).
  - Continuous ceiling on the stock of external payment arrears.
  - Ceiling on net accumulation of domestic expenditure arrears of the budgetary central government.

### Ceiling on Debt-Creating Overall Fiscal Balance
- Measurement:
  - Ceilings for December 31, 2019 and June 30, 2020 are cumulatively measured from June 30, 2019.
- Definition (verbatim):
  - Debt-creating overall fiscal balance is defined by the overall fiscal balance, valued on a commitment basis including grants and excluding the following items: (i) any transaction in expense and/or financial assets added to the budgetary central government arising from debt assumption of called loan guarantees for which the corresponding guaranteed loan had already been included in the Debt Sustainability Analysis of the IMF and World Bank (DSA); and (ii) all expenses in UN peacekeeping operations (PKO) and disbursed PKO financing.
  - Overall fiscal balance is defined according to the GFSM 2014 as net lending/net borrowing after transactions in assets and liabilities are adjusted for transactions deemed to be for public policy purposes (policy lending).
  - Budgetary central government expenditure (i.e. expenses plus net acquisition of non-financial assets) is defined on the basis of payment orders accepted by the Treasury, as well as those executed with external resources.
  - This quantitative target is set as a ceiling on the debt-creating overall fiscal balance as of the beginning of the year.
- Adjusters to the Debt-Creating Overall Fiscal Balance:
  - The ceiling on the debt-creating overall balance will be adjusted upward by the amount of any shortfall between actual and programmed budgetary grants (as defined in Table 1a of the PS), up to a maximum of RWF 97 billion.
  - The ceiling on the debt-creating overall balance will be adjusted upward, up to a maximum of RWF97 billion, representing the amount of foreign financed net acquisition of non-financial assets (foreign financed capital expenditure) financed with drawdown of accumulated government deposits.
  - The ceiling on the debt-creating overall balance will be adjusted upward by the amount of unexpected public expenditures (expenses, and/or net acquisition of non-financial assets) on food imports in the case of a food emergency.

### Floor on Net Foreign Assets (NFA) of the National Bank of Rwanda
- Measurement:
  - A floor applies to NFA for December 31, 2019 and June 30, 2020.
- Definition (verbatim):
  - NFA of the NBR in Rwandan francs is defined, consistent with the definition of the Special Data Dissemination Standard (SDDS) template, as external assets readily available to, or controlled by, the NBR net of its external liabilities.
  - Pledged or otherwise encumbered reserve assets (including swaps) are excluded; such assets include, but are not limited to, reserve assets used as collateral or guarantee for third party external liabilities.
  - Reserves assets corresponding to undisbursed project accounts are also considered encumbered assets and are excluded from the measurement of NFA for program purposes.
  - Foreign assets and foreign liabilities in U.S. dollars are converted to Rwandan francs by using the U.S. dollar/Rwanda franc program exchange rate.
  - Foreign assets and liabilities in other currencies are converted to U.S. dollars by using the actual end-of-period U.S. dollar/currency exchange rate.
  - Foreign liabilities include, inter alia, use of IMF resources.
- Adjusters to the NFA floor:
  - The floor on NFA will be adjusted downward by the amount of any shortfall between actual and programmed budgetary loans and grants per Table 1 of the PS, capped at RWF 97 billion.
  - The floor on NFA will be adjusted downward (upward) by the surplus (shortfall) of cash external debt service payments compared to originally-scheduled payments.
  - The floor on NFA will be adjusted downward by the amount of unexpected public expenditures on food imports in the case of a food emergency.

### Ceiling on the Stock of External Payment Arrears
- Applicability:
  - A continuous ceiling applies to the non-accumulation of payment arrears on external debt contracted or guaranteed by the budgetary central government and entities that form part of the budgetary process.
- Definition (verbatim):
  - External payment arrears are defined as the amount of overdue external debt service obligations (principal and interest) arising in respect of obligations incurred directly or guaranteed by the budgetary central government and entities that form part of the budgetary process.
  - A payment is overdue when it has not been paid in accordance with the contractual date (taking into account any contractual grace periods).
  - Arrears resulting from the nonpayment of debt service for which a clearance framework has been agreed or a rescheduling agreement is sought are excluded from this definition.

### Ceiling on Net Accumulation of Domestic Expenditure Arrears of the Budgetary Central Government
- Applicability:
  - A ceiling applies to net accumulation of domestic expenditure arrears of the budgetary central government.
  - The ceilings for June 30, 2019 is cumulatively measured from June 30, 2018.
  - The ceilings for December 31, 2019 and June 30, 2020 are cumulatively measured from June 30, 2019.
- Definition (verbatim):
  - Domestic expenditure arrears are defined as unpaid claims that are overdue by more than 90 days.
  - Accumulation of domestic expenditure arrears of more than 90 days is calculated as a cumulative change in the stock of expenditure arrears of more than 90 days at each test date from the stock at the end of the previous fiscal year (June 30).
  - Arrears related to claims preceding 1994 will not be counted in the calculation.
- Note:
  - A negative target thus represents a floor on net repayment.

### B. Monetary Policy Consultation Clause (MPCC)
- MPCC headline inflation definition (verbatim):
  - MPCC headline inflation is defined as the year-on-year rate of change of monthly Consumer Price Index (CPI), averaged for the past 12-months, as measured by National Institute of Statistics Rwanda (NISR).
- Consultation triggers and procedures:
  - If the observed headline inflation falls outside the ±3 percentage point range around the mid-point of target band value for end-June 2019, end-December 2019, and end-June 2020 test dates, the authorities will conduct discussions with the Fund staff.
  - If the observed headline inflation falls outside the ±4 percentage point range around 5 percent for end-June and end-December 2019, and end-June 2020 test dates as specified in Table 1a in the PS, the authorities will complete a consultation with the Executive Board which would focus on:
    - (i) the stance of monetary policy and whether the Fund-supported program remains on track;
    - (ii) the reasons for program deviation, taking into account compensating factors; and
    - (iii) proposed remedial actions if deemed necessary.

### C. Memorandum Items and Data Reporting Requirements
- Reporting timelines (unless specified otherwise):
  - Weekly data: within seven days of the end of each week.
  - Monthly data: within five weeks of the end of each month.
  - Quarterly data: within eight weeks of the end of each quarter.
- Specific reporting requirements and definitions:
  - Priority expenditure:
    - Transmitted on a quarterly basis.
    - Defined as the sum of those recurrent expenditures, domestically-financed capital expenditures, and policy lending that the government has identified as priority in line with the NTS.
    - Monitored through the Integrated Financial Management System (IFMS) which tracks priority spending of the annual budget at the program level at the end of each quarter.
  - Domestic revenues:
    - Detailed data transmitted on a monthly basis.
    - Defined according to GFSM 2014 taxes and other revenues, per the budgetary central government statement of operations table, but including:
      - (a) local government taxes (comprised of business licenses, property tax, and rental income tax); and
      - (b) local government fees;
    - Excluding receipts from Peace Keeping Operations.
  - Contracting and guaranteeing of new non-concessional external borrowing with non-residents:
    - Data transmitted on test dates.
    - Excludes external borrowing by Bank of Kigali and Rwanda Development Bank (BRD) which are assumed not to seek or be granted a government guarantee.
    - Applies to private debt for which official guarantees have been extended, including future swaps involving foreign currency loans guaranteed by the public sector.
    - Excludes external borrowing solely for refinancing existing public-sector debt that improves the profile of public sector debt.
    - Excludes on-lending agreements between Government of Rwanda and public-sector enterprises.
- Policy-change notifications and program performance reporting:
  - The authorities will inform IMF staff in writing prior to making any changes in economic and financial policies that could affect the outcome of the financial program (including customs and tax laws, wage policy, and financial support to public and private enterprises).
  - The authorities will inform IMF staff of changes affecting respect of continuous QTs.
  - The authorities will furnish a description of program performance according to QTs as well as reform targets within 8 weeks of a test date.
  - The authorities engage to submit information to IMF staff with the frequency and submission time lag indicated in TMU Table 1; information should be mailed electronically to the Fund (email to the ResRep and the mission chief).

### Summary of selected reporting frequencies (as presented)
- Exchange Rates: D W D
- International Reserve Assets and Reserve Liabilities of the Monetary Authorities: W W M
- Reserve/Base Money: W W M
- Broad Money: M M M
- Central Bank Balance Sheet: W W M
- Consolidated Balance Sheet of the Banking System: M M M
- Interest Rates: M M M
- Volume of transactions in the interbank money market, repo operations, and foreign exchange markets, sales of foreign currencies by NBR to commercial banks and other foreign currency interventions by NBR: D W W
- Composite Index of Economic Activity (CIEA) and sub-components compiled by the NBR: M M M
- Budgetary Central Government — Revenue, Expenditure, Balance and Composition of Financing: Q Q Q
- Comprehensive list of tax and other revenues: M M M
- Disposal of non-financial assets and policy lending: Q Q Q
- Comprehensive list of domestic arrears of the government: SA SA SA
- Stocks of public sector and public-Guaranteed Debt as compiled by MINECOFIN and NBR: Q Q Q
- Exports and Imports of Goods and subcomponents: M M Q
- Exports and Imports of Goods and Services and subcomponents: A A A

*Source: 1rwaea2020001 - This memorandum defines the quantitative targets described in the Program.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1rwaea2020001.pdf_