## 1rwaea2020003 - 220.46 million to help urgent balance of payment needs stemming from the pandemic

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### IMF disbursement and purpose
- Executive Board approved a disbursement of $111.06 million (SDR80.1 million) to Rwanda under the Rapid Credit Facility (RCF).
- This is the second emergency disbursement since the onset of the pandemic and brings the total IMF COVID-19 support to $220.46 million.
- Additional RCF resources intended to help alleviate urgent balance of payments (BOP) and budget needs, including financing for health, social protection, and support to the most impacted sectors and vulnerable groups.
- Disbursement follows the Executive Board’s decision on April 9, 2020 to double the annual access limit under the RCF to 100 percent of quota.
- Authorities requested the additional RCF disbursement of 50 percent of quota (SDR 80.1 million) under the “exogenous shock” window to be made available in its entirety as budget support.

### Recent economic impact and outlook
- Pandemic impact and near-term indicators:
  - Rwanda confirmed 359 cases of COVID-19 infection with one death reported as of May 30.
  - Weekly business turnover contracted on average by 45 percent in industry and 60 percent in services (year to April).
  - Tax revenues were 9.7 percent below target in the first quarter of the year.
  - CPI inflation remained high at 8 percent y/y in April (0.5 percentage points lower than March).
  - Export growth declined from 49 percent in January to 4 percent in March y/y.
  - Import growth moderated from 42 percent in January to 14 percent in March.
  - The Rwandan franc depreciated against the dollar by 4.5 percent y/y at end-April.
- Growth and inflation projections:
  - 2020 real GDP growth revised down from 5.1 to 2.0 percent.
  - 2021 growth projected to rebound to 6.3 percent.
  - Average headline inflation expected to reach 6.9 percent in 2020.
  - Inflation projected to reach 1 percent in 2021.
- Epidemiological update (later reporting):
  - Confirmed cases rose to 431 with two casualties reported as of June 6.

### Pandemic fiscal response and Economic Recovery Plan (ERP)
- Authorities deployed health and economic measures totaling USD 311 million (3.3 percent of GDP).
- ERP features:
  - Economic Recovery Fund (ERF) to support affected firms via subsidized loans and credit guarantees; USD 50 million dedicated to the tourism sector.
  - Total government response cost: USD 311 million or 3.3 percent of GDP over the current fiscal year and the next.
- Social protection scaling (SP-RRP):
  - Total cost of scaling up existing social safety net programs estimated at RWF 133.6 billion (1.4 percent of GDP) over the next 18 months.
  - Aim to raise beneficiary household coverage from 26 percent in March 2020 to 70 percent by December 2020.
  - Increase the share of the poorest households covered by the VUP income support programs from 64 to 90 percent.

### Fiscal, external, and debt outlook and risks
- BOP and financing needs:
  - Urgent BOP need currently estimated at about USD 433 million.
  - The additional RCF disbursement requested was 50 percent of quota (SDR 80.1 million); this brings total RCF disbursement to 100 percent of quota.
- Fiscal and debt indicators:
  - Headline and debt-creating budget balances (excluding PKO) projected to deteriorate by an additional 4.2 ppts of GDP over this and the next fiscal year combined.
  - Public debt is now expected to rise above 75 percent of GDP from 2021.
- External sector:
  - Current account deficit projected to widen to 16.7 percent of GDP from the 16.0 percent of GDP envisaged in RCF-1.
  - More depressed investor sentiment expected to reduce FDI inflows further.
- External support and financing:
  - Since RCF-1, authorities secured additional financing of USD 285 million to be disbursed by end-2020.
  - Assessing participation in the G-20 Debt Service Suspension Initiative, which could amount up to USD 17.4 million.
- Risk factors:
  - Pandemic impact subject to considerable uncertainty and could be worse if more protracted or recurrent.
  - Heavy rains in the first half of the year could further affect growth and inflation.

### Policy recommendations and conditionalities highlighted
- Fiscal policy:
  - Fiscal deficit should accommodate the impact of COVID-19 provided enough financing is mobilized and a credible adjustment path is identified.
  - COVID-19-related spending should be well-targeted, cost-effective, not crowd out other priority areas, and be closely monitored.
  - Tax relief measures should be temporary, targeted, and closely tracked.
  - New fiscal risks should be managed and reported; contingent measures need to be identified.
  - Revise the program fiscal rule to keep debt at prudent levels and allow flexibility for future exogenous shocks.
- Monetary and financial sector policy:
  - Maintain data-driven monetary policy and continue to provide liquidity support to cushion the pandemic’s impact.
  - Step up supervision to safeguard financial stability and stand ready to provide additional liquidity to the financial system.
  - Encourage prudent renegotiation of loan terms for impacted borrowers without lowering loan classification and provisioning standards.
  - Allow flexibility of the exchange rate.
- Governance and transparency:
  - Rely on and continue to strengthen public financial management systems to ensure effective and transparent use of public funds.
  - Authorities committed to transparency and accountability in the management of emergency financing.
  - ERP and ERF to be subject to an audit to be submitted to Parliament.

### Social protection measures and targeted tax measures
- Tax and support measures implemented:
  - Suspension of down payments on outstanding tax for amicable settlement and softening enforcement for tax arrears collection.
  - Extension of deadline for filing and paying CIT; VAT refunds to SMEs fast-tracked.
  - CIT and PIT payments to be based on current year transactions.
  - Private school teachers earning less than RWF 150,000 per month to benefit from PIT exemption for 6 months.
  - Tourism and hotel employees earning less than RWF 150,000 per month to benefit from PIT exemption for 3 months.
  - Locally produced masks exempt from VAT.
- Social protection actions:
  - Door-to-door food distribution to vulnerable households; cash transfers to casual workers; subsidized access to agricultural inputs; measures to ensure poor households’ access to basic health and education.
  - Support for economic recovery includes casual employment in labor-intensive public works, pro-poor credit schemes, and basic equipment to start new businesses.
  - Measures to ensure access to basic services include reduction of contributions to the community-based health system, subsidized tuition fees and school material, and construction of shelters and sanitation facilities.

### Debt sustainability analysis (DSA) and projections
- Macro assumptions and shock effects incorporated:
  - DSA assumes real GDP growth down by 6 percentage points relative to pre-pandemic projection; exports of goods and services decline 40 percent; tax revenues decline 20 percent; fiscal deficit widens by about 6 percentage points of GDP.
- Key DSA projections (selected):
  - Real GDP growth (percent): 2019: 9.4; 2020: 2.0; 2021: 6.3; 2022: 8.0; 2023: 8.6; 2030: 7.2; 2040: 6.5.
  - Growth of exports of G&S (US dollar terms, percent): 2019: 5.7; 2020: -36.6; 2021: 64.5.
  - Government revenues (excluding grants, percent of GDP): 2019: 19.5; 2020: 15.5; 2021: 16.5.
  - Gross external financing need (Billion of U.S. dollars): 2020: 2.0; 2021: 1.1.
- Debt sustainability findings:
  - Mechanical risk rating under the external DSA: Moderate.
  - Mechanical risk rating under the public DSA: Moderate.
  - Risk of external debt distress: Moderate.
  - Overall risk of debt distress: Moderate.
  - Rwanda’s Composite Indicator (CI) score: 3.26 (above upper threshold 3.05).
  - PV of total public debt projected to peak at 53 percent of GDP in 2025.
  - PV of public debt-to-GDP ratio (public DSA): 2019: 42.8; 2020: 48.2; 2021: 52.5; 2025: 53.0; 2030: 50.2.
  - Public sector debt (percent of GDP): 2019: 58.5; 2020: 68.1; 2021: 75.7; 2025: 75.5; 2030: 72.3.
  - PPG debt service-to-exports ratio (percent): 2020: 22.6; 2021: 12.0; 2023: 20.3.
- Stress test outcomes and vulnerabilities:
  - COVID-19 shock causes one-off breaches to PV of debt-to-exports and debt service-to-exports ratio thresholds in 2020 under the baseline, and multiple breaches under most extreme shocks.
  - Rolling over of the 10-year Eurobond issued in 2013 leads to a one-off breach of the debt-service-to-revenue ratio under the baseline in 2023.
  - Staff notes Rwanda has "limited space to absorb shocks."

### Monetary and financial sector measures and outcomes
- BNR measures:
  - April MPC cut policy rate by 50 basis points to 4.5 percent; staff supports data-dependent approach.
  - Reduction of banks’ reserve requirement ratio from 5 to 4 percent on April 1 provided a RWF 23.4 billion (0.2 percent of GDP) liquidity boost to the financial sector.
  - Temporary suspension of dividend payouts by banks and insurers to preserve capital and liquidity; insurers allowed premium payment in instalment or deferred payment and temporary adjustment of solvency calculations.
- Loan restructuring and supervision:
  - As at April 10, banks had received restructuring applications accounting for 25.5 percent of the total loan portfolio.
  - 92 percent of these loans (worth RWF 255 billion or 2.6 percent of GDP) have been restructured with at least 3-month moratoria and fee waivers.
  - BNR instituted monthly reporting and monitoring requirements for restructured loans.
  - Staff encourages issuance of detailed guidance to banks and MFIs on management of restructured loans, including prudent classification and provisioning.
- Digital and operational measures:
  - Promotion of cashless payments, digital contact tracing, robots to monitor patients, drones for awareness, online clearance pass platform, e-learning, ICT-based food donation management, and a private-sector digital platform to ease SMEs’ access to finance and advisory services.

### Authorities’ positions, commitments, and requests
- Authorities broadly agreed with staff on the economic outlook and downside risks; expect sharp decline in 2020, particularly in industry and services.
- Fiscal stance and financing:
  - Authorities expect dire public finance impact, unprecedented revenue losses, larger budget deficits, and significant public debt build-up.
  - Consider the RCF disbursement timely and will continue seeking concessional financing to avoid crowding out private sector credit.
  - Plan to reprioritize spending if pandemic impact is larger than estimated.
  - Reaffirm commitment to growth-friendly fiscal consolidation once the crisis abates.
- Safeguards, transparency, and governance:
  - Authorities committed to effective and transparent use of public funds, including RCF funds.
  - Will undertake an update of the safeguards assessment before Board approval of any subsequent arrangement to which the safeguards policy applies; last safeguards assessment undertaken in 2016 and all recommendations implemented.
  - Commit to procurement transparency under the Law Governing Public Procurement and E-Procurement; Office of the Auditor General to audit pandemic-linked expenditures and publish outcomes.
- Financing request and capacity to repay:
  - Request for RCF disbursement: SDR 80.1 million (50 percent of quota), to be disbursed to Ministry of Finance and Economic Planning’s account at NBR.
  - Total outstanding credit from the Fund, once the second RCF is disbursed, will amount to 180 percent of quota.
  - Total obligations to the Fund would remain below 1.7 percent of exports of goods and services, 2.3 percent of government revenue, and up to 2.7 percent of gross international reserves.
  - Authorities signed a framework agreement between government and BNR on respective roles for servicing Fund obligations.

### Key exact figures and projections (preserved)
- $111.06 million (SDR80.1 million) — RCF disbursement approved.
- $220.46 million — total IMF COVID-19 support to Rwanda.
- USD 311 million (3.3 percent of GDP) — health and economic measures deployed.
- USD 433 million — estimated urgent BOP need.
- 50 percent of quota (SDR 80.1 million) — additional disbursement requested under RCF exogenous shock window.
- 100 percent of quota — total disbursement under the RCF after request.
- Real GDP growth revised from 5.1 to 2.0 percent for 2020.
- 6.3 percent — projected growth in 2021.
- Average headline inflation expected to reach 6.9 percent in 2020; projected to reach 1 percent in 2021.
- RWF 133.6 billion (1.4 percent of GDP) — cost to scale up social safety nets under SP-RRP over 18 months.
- Beneficiary coverage targets: from 26 percent (March 2020) to 70 percent (December 2020).
- VUP poorest households coverage: from 64 to 90 percent.
- COVID-19 confirmed cases as of May 30: 359 cases; 1 death.
- Weekly business turnover contraction: 45 percent (industry) and 60 percent (services) year to April.
- Tax revenues 9.7 percent below target in Q1.
- CPI inflation 8 percent y/y in April.
- Export growth: 49 percent (January) to 4 percent (March) y/y.
- Import growth: 42 percent (January) to 14 percent (March) y/y.
- Rwandan franc depreciation: 4.5 percent y/y at end-April.
- Fiscal balances projected to deteriorate by an additional 4.2 ppts of GDP over this and the next fiscal year combined.
- Public debt expected to rise above 75 percent of GDP from 2021.
- Current account deficit projected to widen to 16.7 percent of GDP (from 16.0 percent in RCF-1).
- Additional financing secured since RCF-1: USD 285 million to be disbursed by end-2020.
- G-20 Debt Service Suspension Initiative potential amount: up to USD 17.4 million.
- PIT exemptions: private school teachers and tourism and hotel employees earning less than RWF 150,000 per month exempt for 6 and 3 months, respectively.

*International Monetary Fund — Rwanda: Request for Disbursement Under the Rapid Credit Facility (Executive Summary and selected sections, June 2020).*

### 220.46 million to help urgent balance of payment needs stemming from

### 1rwaea2020003 - 220.46 million to help urgent balance of payment needs stemming from the pandemic.

### IMF disbursement and purpose
- The Executive Board approved a disbursement of $111.06 million (SDR80.1 million) to Rwanda under the Rapid Credit Facility (RCF).
- This is the second emergency disbursement since the onset of the pandemic and brings the total IMF COVID-19 support to $220.46 million.
- The additional resources under the RCF are intended to help alleviate urgent balance of payments (BOP) and budget needs, including financing for health, social protection, and support to the most impacted sectors and vulnerable groups.
- The disbursement follows the Executive Board’s decision on April 9, 2020 to double the annual access limit under the RCF to 100 percent of quota.

### Recent economic impact and outlook
- The pandemic has severely impacted Rwanda’s economy via weaker domestic demand, losses of revenue, and a sharp decline in exports and remittances.
- As of May 30, Rwanda confirmed 359 cases of COVID-19 infection with one death reported.
- Sectoral impacts and near-term indicators:
  - Weekly business turnover contracted on average by 45 percent in industry and 60 percent in services (year to April).
  - Tax revenues were 9.7 percent below target in the first quarter of the year.
  - CPI inflation remained high at 8 percent y/y in April (0.5 percentage points lower than March).
  - Export growth declined from 49 percent in January to 4 percent in March y/y.
  - Import growth moderated from 42 percent in January to 14 percent in March.
  - The Rwandan franc depreciated against the dollar by 4.5 percent y/y at end-April.
- Growth and inflation projections:
  - 2020 real GDP growth revised down from 5.1 to 2.0 percent.
  - 2021 growth projected to rebound to 6.3 percent.
  - Average headline inflation expected to reach 6.9 percent in 2020.
  - Inflation projected to reach 1 percent in 2021.

### Pandemic fiscal response and Economic Recovery Plan (ERP)
- Authorities deployed health and economic measures totaling USD 311 million (3.3 percent of GDP).
- The ERP includes an Economic Recovery Fund (ERF) to support affected firms via subsidized loans and credit guarantees; USD 50 million is dedicated to the tourism sector.
- The total cost of the government response in the plan is about USD 311 million or 3.3 percent of GDP over the current fiscal year and the next.
- Social protection scaling under the SP-RRP:
  - Total cost of scaling up existing social safety net programs estimated at RWF 133.6 billion (1.4 percent of GDP) over the next 18 months.
  - Aim to raise beneficiary household coverage from 26 percent in March 2020 to 70 percent by December 2020.
  - Increase the share of the poorest households covered by the VUP income support programs from 64 to 90 percent.

### Policy recommendations and conditionalities highlighted
- Fiscal policy:
  - Fiscal deficit should accommodate the impact of COVID-19 provided enough financing is mobilized and a credible adjustment path is identified.
  - COVID-19-related spending should be well-targeted, cost-effective, not crowd out other priority areas, and be closely monitored.
  - Tax relief measures should be temporary, targeted, and closely tracked.
  - New fiscal risks should be managed and reported; contingent measures need to be identified.
  - The program fiscal rule should be revised to keep debt at prudent levels and allow flexibility for future exogenous shocks.
- Monetary and financial sector policy:
  - Maintain data-driven monetary policy and continue to provide liquidity support to cushion the pandemic’s impact.
  - Step up supervision to safeguard financial stability.
  - Stand ready to provide additional liquidity to the financial system.
  - Encourage prudent renegotiation of loan terms for impacted borrowers without lowering loan classification and provisioning standards.
  - Allow flexibility of the exchange rate.
- Governance and transparency:
  - Rely on and continue to strengthen public financial management systems to ensure effective and transparent use of public funds.
  - Authorities committed to transparency and accountability in the management of emergency financing.

### Fiscal, external, and debt outlook and risks
- BOP and financing needs:
  - Urgent BOP need currently estimated at about USD 433 million.
  - The additional RCF disbursement requested was 50 percent of quota (SDR 80.1 million) under the “exogenous shock” window; this brings total RCF disbursement to 100 percent of quota.
- Fiscal and debt indicators:
  - Headline and debt-creating budget balances (excluding PKO) projected to deteriorate by an additional 4.2 ppts of GDP over this and the next fiscal year combined.
  - Public debt is now expected to rise above 75 percent of GDP from 2021.
- External sector:
  - Current account deficit projected to widen to 16.7 percent of GDP from the 16.0 percent of GDP envisaged in RCF-1.
  - More depressed investor sentiment expected to reduce FDI inflows further.
- External support and financing:
  - Since RCF-1, authorities secured additional financing of USD 285 million to be disbursed by end-2020.
  - Assessing participation in the G-20 Debt Service Suspension Initiative, which could amount up to USD 17.4 million.
- Risk factors:
  - The pandemic’s impact is subject to a considerable margin of uncertainty and could be worse if the pandemic is more protracted or recurrent.
  - Heavy rains in the first half of the year could further affect growth and inflation.

### Social protection measures and targeted tax measures
- Tax and support measures implemented:
  - Suspension of down payments on outstanding tax for amicable settlement and softening enforcement for tax arrears collection.
  - Extension of deadline for filing and paying CIT; VAT refunds to SMEs fast-tracked.
  - CIT and PIT payments to be based on current year transactions.
  - Private school teachers earning less than RWF 150,000 per month to benefit from PIT exemption for 6 months.
  - Tourism and hotel employees earning less than RWF 150,000 per month to benefit from PIT exemption for 3 months.
  - Locally produced masks exempt from VAT.
- Social protection actions:
  - Door-to-door food distribution to vulnerable households, cash transfers to casual workers, subsidized access to agricultural inputs, and measures to ensure poor households’ access to basic health and education.
  - Support for economic recovery includes casual employment in labor-intensive public works, pro-poor credit schemes, and basic equipment to start new businesses.
  - Measures to ensure access to basic services include reduction of contributions to the community-based health system, subsidized tuition fees and school material, and construction of shelters and sanitation facilities.

### Key exact figures and projections (preserved)
- $111.06 million (SDR80.1 million) — RCF disbursement approved.
- $220.46 million — total IMF COVID-19 support to Rwanda.
- USD 311 million (3.3 percent of GDP) — health and economic measures deployed.
- USD 433 million — estimated urgent BOP need.
- 50 percent of quota (SDR 80.1 million) — additional disbursement requested under RCF exogenous shock window.
- 100 percent of quota — total disbursement under the RCF after request.
- Real GDP growth revised from 5.1 to 2.0 percent for 2020.
- 6.3 percent — projected growth in 2021.
- Average headline inflation expected to reach 6.9 percent in 2020; projected to reach 1 percent in 2021.
- RWF 133.6 billion (1.4 percent of GDP) — cost to scale up social safety nets under SP-RRP over 18 months.
- Beneficiary coverage targets: from 26 percent (March 2020) to 70 percent (December 2020).
- VUP poorest households coverage: from 64 to 90 percent.
- COVID-19 confirmed cases as of May 30: 359 cases; 1 death.
- Weekly business turnover contraction: 45 percent (industry) and 60 percent (services) year to April.
- Tax revenues 9.7 percent below target in Q1.
- CPI inflation 8 percent y/y in April.
- Export growth: 49 percent (January) to 4 percent (March) y/y.
- Import growth: 42 percent (January) to 14 percent (March) y/y.
- Rwandan franc depreciation: 4.5 percent y/y at end-April.
- fiscal balances projected to deteriorate by an additional 4.2 ppts of GDP over this and the next fiscal year combined.
- Public debt expected to rise above 75 percent of GDP from 2021.
- Current account deficit projected to widen to 16.7 percent of GDP (from 16.0 percent in RCF-1).
- Additional financing secured since RCF-1: USD 285 million to be disbursed by end-2020.
- G-20 Debt Service Suspension Initiative potential amount: up to USD 17.4 million.
- PIT exemptions: private school teachers and tourism and hotel employees earning less than RWF 150,000 per month exempt for 6 and 3 months, respectively.

*International Monetary Fund — Rwanda: Request for Disbursement Under the Rapid Credit Facility (Executive Summary and selected sections, June 2020).*

### 10. Rwanda continues to face an urgent balance of payments need and a fiscal financing

### 10. Rwanda continues to face an urgent balance of payments need and a fiscal financing gap

### Balance of payments and external financing gap
- The deterioration in the external current account would cause the central bank’s foreign reserves to fall below adequate levels.
- Initial support from the RCF-1 disbursement and other development partners has helped reduce the external financing gap in 2020, which however remains sizeable at USD 4 33 million (4.1 percent of GDP) ( Table 4).
- Table excerpt (as presented):
  - Proj. Financing gap573433
  - Identified financing source183395
  - IMF109110
  - RCF disbursement109110
  - World Bank73100
  - African Development Bank0100
  - Arab Bank for Economic Development in Africa020
  - French Development Agency045
  - OPEC Fund for International Development020
  - Unidentified financing source39138
- Footnotes referenced:
  - 1/ Initial projection at the time of the first RCF request and includes the additional reserves needed to bring import cover to 4 months, which is a minimum level of reserves to be adequate (IMF Country Report No. 20/115).
  - 2/ The financing gap after accounting for RCF-1 disbursement of US$109.4 million and CCRT grant of US$ 22 million.

### Fiscal impact of COVID-19 and financing gap (2019/20–2020/21)
- The total cost of the pandemic now stands at 7. 3 percent of GDP over the next two fiscal years, more than twice the amount estimated at the time of RCF-1, reflecting upward revisions of similar magnitude in revenue losses (4 percent of GDP) and increases in public spending (3.3 percent of GDP).
- At 5.6 percent of GDP, the fiscal financing gap over FY 19/20 and 20/21 is about 2 ppts of GDP larger than the estimate at the time of RCF-1.
- Additional financing expected to reduce the gap:
  - Additional RCF financing: 1.1 percent of GDP
  - Prospective financing from development partners: 2.8 percent of GDP
  - Residual financing gap: 1.7 percent of GDP in FY 20/21
- Select figures from Table 1 (as presented, fiscal years 2019/20 and 2020/21; percent of GDP):
  - Revenue and grants: 23.3 22.1 21.9 23.3 22.7 20.6
  - Total revenue: 19.1 18.0 17.5 18.8 18.2 16.4
  - Tax revenue: 16.4 15.2 14.8 16.6 16.2 14.2
  - Nontax revenue: 2.6 2.8 2.7 2.2 2.1 2.1
  - Total expenditure and net lending: 30.4 32.5 34.3 28.8 29.9 30.1
  - Current expenditure: 15.0 16.0 16.4 14.8 15.4 16.0
  - Capital expenditure: 12.0 13.1 13.6 12.0 12.4 11.1
  - Overall balance (incl. grants, commitment basis): -7.1 -10.4 -12.3 -5.6 -7.2 -9.5
  - Overall balance (incl. grants, cash basis): -7.7 -11.0 -12.9 -5.9 -7.5 -9.8
  - Financing: 7.7 8.8 9.5 5.9 6.0 7.7
  - Financing Gap: -- 2.2 3.5 -- 1.5 2.1
  - Prospective RCF: -- 1.0 1.1 ------
  - Prospective financing from World Bank: -- 0.7 1.0 ------
  - Prospective financing other development partners: ---- 1.4 ---- 0.4
  - Residual financing gap: -- 0.5 ------ 1.7
- Memorandum item:
  - Debt-creating ov. balance (exc. PKO, 5-yr avg, com.basis): -5.5 -6.8 -7.8 -5.5 -6.7 -8.4

### Staff assessment and policy recommendations (fiscal)
- Staff deems the additional fiscal relaxation appropriate provided remaining financing gaps are closed and a credible adjustment path identified.
- Key recommendations:
  - Continue efforts to mobilize concessional resources to close remaining financing gaps; avoid costly domestic financing that would crowd out credit to the private sector.
  - Design and prepare to implement a credible adjustment path to bring public debt to prudent levels as soon as the crisis abates.
  - Measures to include: step up revenue mobilization efforts and better prioritize public investment; strengthen contingency planning.
  - Revise the program fiscal rule to tighten its link with the East African Monetary Union (EAMU) convergence criteria for public debt while allowing flexibility for exogenous shocks.
- Clarifications and safeguards requested on announced fiscal measures:
  - Ensure the Economic Recovery Fund (ERF) is well-targeted, its risks appropriately assessed, managed, and reported.
  - Tax relief measures should be temporary, costed, and closely monitored.
  - ERP and ERF to be subject to an audit to be submitted to Parliament.
  - Staff stands ready to provide remote technical assistance to strengthen ERP and ERF design and implementation.

### Contingency planning and financing alternatives
- The ERP would benefit from identification of contingent measures to mobilize additional financing and protect priority spending given substantial uncertainties.
- Staff urged assessment of:
  - Repurposing existing donor funds.
  - Potential to increase domestic borrowing without crowding out the private sector.

### Public Financial Management, transparency, and oversight
- Authorities recognize importance of effective and transparent public fund use; strengthened PFM institutional and legal frameworks cited.
- Measures and systems in place:
  - Organic Law on State Finances and Property (2013); Law on Public Procurement (2018); Ministerial Order on Financial Regulations (2016); PFM Policies and Procedures Manual (2019).
  - Cohesive planning framework linked to Vision 2020/50 and National Strategy for Transformation.
  - Good donor coordination and reliance on national systems.
  - Integrated Financial Management and Information Systems (IFMIS) roll-out covering central and local governments, district hospitals, health centers, and schools; connected with Integrated Personnel and Payroll System and BNR’s internet banking system.
  - Advanced automation of revenue collection: up-to-date taxpayer database, electronic billing machines, e-Tax systems.
  - Automated and transparent procurement (E-Procurement) with publicly available information on government contracts.
  - Ongoing migration to accrual basis accounting using IPSAS.
  - Well-functioning internal and external audits and external oversight.
- Specific transparency actions for COVID-19 expenditures:
  - Creation of financing item “COVID-19 response” under chart of accounts.
  - Separate bank account under the treasury single account system to receive pandemic contributions.
  - Pandemic-related expenditures will be audited by the Office of the Auditor General and outcomes made publicly available.

### Debt sustainability and risks
- Staff assessment: Rwanda’s debt is assessed to remain sustainable but risk of debt distress shifts to moderate from low due to the pandemic (Annex I).
- Key projections and risks:
  - Incorporating COVID-19 in the DSA baseline shifts assessment from low to moderate risk of debt distress versus 2019 DSA update and expedited DSA under RCF-1.
  - Higher concessional loans from multilateral and bilateral donors and larger external borrowing related to scaling-up of the new international airport project expected to increase PPG external debt accumulation.
  - Present value (PV) of debt reaching 50.2 percent of GDP in 2030.
  - Sharp decline in exports leads to one-off breaches to the PV of debt-to-exports ratio and debt service-to-exports ratio thresholds in 2020 under the baseline, and multiple breaches under the most extreme shock.
  - Rolling over of the 10-year Eurobond issued in 2013 leads to a one-off breach of the debt-service-to-revenue ratio under the baseline in 2023.
- Recommended actions:
  - Timely return to credible fiscal consolidation after the crisis abates.
  - Revisions to the debt management strategy to increase liquidity buffers and smooth out debt service.

### Monetary and financial sector measures
- BNR monetary stance and liquidity measures:
  - April MPC cut policy rate by 50 basis points to 4.5 percent; staff supports data-dependent approach.
  - Reduction of banks’ reserve requirement ratio from 5 to 4 percent on April 1 provided a RWF 23.4 billion (0.2 percent of GDP) liquidity boost to the financial sector.
  - Temporary suspension of dividend payouts by banks and insurers to preserve capital and liquidity; insurers allowed premium payment in instalment or deferred payment and temporary adjustment of solvency calculations.
  - Extended credit facility remains untapped to date; banks expected to increasingly use BNR’s special facility as easing of restrictions allows businesses to resume.
- Loan restructuring and supervision:
  - As at April 10, banks had received restructuring applications accounting for 25.5 percent of the total loan portfolio.
  - 92 percent of these loans (worth RWF 255 billion or 2.6 percent of GDP) have been restructured with at least 3-month moratoria and fee waivers.
  - BNR instituted monthly reporting and monitoring requirements for restructured loans.
  - Staff encourages issuance of detailed guidance to banks and MFIs on management of restructured loans, including prudent classification and provisioning; support available via ongoing technical assistance.
  - Measures to support MFIs that lend to micro and small businesses in the informal sector are yet to be articulated.

### Digital technologies and economic recovery support
- Authorities continue to leverage digital technologies to contain virus spread and support recovery:
  - Promotion of cashless payments; digital contact tracing; robots to monitor patients; drones with automated megaphones for awareness; online platform for clearance passes for domestic movements.
  - E-learning tools for education from home; judiciary use of Skype and videoconferencing for court proceedings.
  - ICT-based system to manage food donation and distribution.
  - Private sector federation launched a digital platform to ease SMEs’ access to financial advisory services, access to finance, business training and policy information.

### Authorities’ views and requests
- Authorities broadly agreed with staff on the economic outlook, noting significant downside risks and uncertainty and expecting a sharp decline in 2020, particularly in industry and services.
- Fiscal stance and financing:
  - Authorities expect dire public finance impact, unprecedented revenue losses, larger budget deficits, and significant public debt build-up.
  - They consider the RCF disbursement timely and will continue seeking concessional financing to avoid crowding out private sector credit.
  - They plan to reprioritize spending if pandemic impact is larger than estimated.
- Transparency and consolidation commitments:
  - Authorities committed to well-targeted, cost-effective, transparent COVID-19 spending that does not crowd out priority areas and to growth-friendly fiscal consolidation after the crisis.
  - Plan to formulate and discuss desirable policies in the next PCI review.
- Monetary and financial measures:
  - Authorities view BNR’s monetary and financial measures as appropriate and committed to data-driven policy and safeguarding financial stability.
  - BNR is assessing credit and liquidity risks, financial institutions’ operational resilience, and expediting guidance to banks and MFIs on loan restructuring, classification, and provisioning.

### Access, capacity to repay, and RCF request
- Authorities are requesting a disbursement under the RCF “exogenous shock” window equivalent to 50 percent of quota (SDR 80.1 million) and request this financing be made available in its entirety as budget support.
- Purpose: address urgent fiscal needs from the pandemic and avoid a sharp drop in international reserves; balance of payments difficulties caused primarily by a sudden exogenous shock.
- Capacity to repay:
  - Total outstanding credit from the Fund, once the second RCF is disbursed, will amount to 180 percent of quota.
  - Total obligations to the Fund would remain below 1.7 percent of exports of goods and services, 2.3 percent of government revenue, and up to 2.7 percent of gross international reserves.
  - Servicing risks mitigated by low indebtedness to the Fund and availability of concessional financing.
  - Authorities have signed a framework agreement between the government of Rwanda and BNR on their respective roles and responsibilities for servicing financial obligations to the Fund.

*Source: Rwandan authorities, and IMF staff estimates and projections (excerpts from the IMF PDF chapter). *

### 26.      The authorities are committed to undertaking an update of the safeguards assessment

### 26.      The authorities are committed to undertaking an update of the safeguards assessment

### Safeguards assessment
- The authorities will undertake an update of the safeguards assessment before Board approval of any subsequent arrangement to which the safeguards policy applies.
- The update would include an authorization for Fund staff to hold discussions with the central bank’s external auditors and to have access to the central bank’s most recent external audit reports.
- The last safeguards assessment was undertaken in 2016; since then, authorities have implemented all safeguards recommendations and BNR continues to publish its audited financial statements.

### Staff appraisal — macroeconomic impact and outlook
- The pandemic continues to severely impact the economy; weak global demand and supply chain disruptions coupled with domestic containment measures, including the economic lockdown, have affected all sectors of the economy.
- Growth is expected to fall from 9.4 in 2019 to 2 percent in 2020.
- The shock is putting pressures on public finances and the balance of payments.
- The economic outlook remains highly uncertain with risks tilted to the downside.
- Staff assesses Rwanda’s debt to remain sustainable with external and overall public debt at a moderate risk of debt distress.

### Policy assessment and recommendations
- Staff supports the authorities’ decision to further relax the fiscal stance provided the remaining financing gaps are closed and a credible adjustment path is identified.
- Staff supports the authorities’ decision to reduce the policy rate given the deteriorated economic outlook.
- Staff emphasizes the need to properly monitor and report the use of public funds to support the economic recovery.
- Staff welcomes BNR’s effort to strengthen supervision and encourages the central bank to promptly issue guidance to banks and MFIs on the management of restructured loans.
- Staff welcomes the authorities’ commitment to fiscal consolidation once the crisis abates to preserve fiscal sustainability and reduce debt-related risks, and to maintain monetary policy data-driven.

### IMF support and financing
- Staff supports Rwanda’s request for a disbursement under the Rapid Credit Facility in the amount of SDR 80.1 million (50 percent of quota).
- This disbursement would bring total disbursements under the RCF to 100 percent of quota to address the shock from the pandemic.
- Staff support is based on:
  - the urgent balance of payments needs;
  - the severity of the economic impact from the pandemic;
  - the authorities’ existing and prospective policies to address this external shock; and
  - their commitment to fiscal prudence along with their strong track record which will mitigate any risks for the Fund.

*Source: IMF staff report content provided in the source PDF.*

### Appendix I. Letter of Intent

### Appendix I. Letter of Intent

### Context and purpose
- Letter dated Kigali, June 4, 2020, addressed to Ms. Kristalina Georgieva, Managing Director, International Monetary Fund.
- Expresses appreciation for IMF approval of emergency financing under the Rapid Credit Facility (RCF) on April 2, 2020, and references an earlier Letter of Intent dated March 26, 2020, attached to the staff report for the RCF request.
- States that Rwanda continues to experience an urgent balance of payments (BOP) need arising from the COVID-19 pandemic.

### Economic outlook and financing gap
- Since the April 2, 2020 RCF approval, Rwanda’s economic outlook has deteriorated.
- Preliminary indicators suggest all sectors affected by the pandemic and lockdown.
- 2020 GDP forecast revised from 5.1 to 2.0 percent.
- Urgent financing needs quantified as:
  - Fiscal financing gap of RWF 545 billion (after accounting for the April 2 RCF disbursement).
  - Urgent BOP financing need of USD 433 million.

### Request for additional IMF support
- Requests additional emergency financing under the RCF “exogenous shock” window in the amount of SDR 80.1 million, equivalent to 50 percent of Rwanda’s quota.
- Requests disbursement as direct budget support to the Ministry of Finance and Economic Planning’s account at the National Bank of Rwanda (NBR).
- Notes that a memorandum of understanding has been signed between the Government of Rwanda and NBR on their respective responsibilities for servicing financial obligations to the IMF.

### Policy commitments and response measures
- Reaffirms commitment to health and economic policies outlined in the March 26, 2020 LOI, including:
  - Keeping monetary policy data dependent.
  - Maintaining exchange rate flexibility.
  - Cushioning the financial system through liquidity support measures.
- Additional measures rolled out to support households and firms:
  - Food distribution program.
  - Various tax deferral and relief measures.
  - A comprehensive multi-sectoral economic recovery plan and an economic recovery fund to support firms affected by the pandemic.
- Commits to growth-friendly fiscal consolidation as soon as the COVID-19 crisis abates to keep debt sustainable and to assess and mitigate emerging fiscal risks.
- Plans to formulate and discuss desirable policies in the context of the next PCI review.

### Transparency, procurement, and accountability
- Commits to effective and transparent use of public funds, including RCF funds.
- Will carry out procurement transparency in accordance with the Law Governing Public Procurement and the E-Procurement system, which provides publicly available information on:
  - All awarded government contracts.
  - Name of companies that participated in the tender.
  - Each initial bid.
  - Name and price of the winning bid.
  - Total amount of the contract.
  - Delivery period.
- States that, under the Law on State Finances and Property 2013 (Organic Budget Law), the Office of the Auditor General will audit all government expenditures and procurement tenders, including those linked to the pandemic, and publish the outcome.

### External financing mobilization
- States that the April 2 RCF approval has been catalytic in securing additional financing from development partners in the amount of USD 245 million to be disbursed before end June.

*Appendix I. Letter of Intent (Kigali, June 4, 2020).*

### 2020. We are confident that the approval of the present request will produce the same effect

### RWANDA — REQUEST FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY—DEBT SUSTAINABILITY ANALYSIS

### Macroeconomic assumptions and COVID-19 shock
- DSA incorporates expected impacts of the COVID-19 pandemic: real GDP growth down by 6 percentage points relative to the pre-pandemic projection; exports of goods and services decline 40 percent; tax revenues decline 20 percent; fiscal deficit widens by about 6 percentage points of GDP.
- Assumes recovery from 2021 with economy gradually reverting to pre-pandemic trend in the medium term.
- Key macroeconomic assumptions (selected):
  - Real GDP growth (in percent): 2017: 4.0; 2018: 8.6; 2019: 9.4; 2020: 2.0; 2021: 6.3; 2022: 8.0; 2023: 8.6; 2024: 7.1; 2025: 6.1; 2030: 7.2; 2040: 6.5.
  - Growth of exports of G&S (US dollar terms, in percent): 2019: 5.7; 2020: -36.6; 2021: 64.5; 2022: 14.8; 2023: 31.2; 2024: 3.5; 2025: 9.0; 2030: 10.5; 2040: 12.7.
  - Government revenues (excluding grants, in percent of GDP): 2017: 17.9; 2018: 19.0; 2019: 19.5; 2020: 15.5; 2021: 16.5; 2022: 17.0; 2023: 17.5; 2024: 18.0; 2025: 18.5; 2030: 19.7; 2040: 23.1.
  - Gross external financing need (Billion of U.S. dollars): 2017: 0.6; 2018: 0.6; 2019: 0.8; 2020: 2.0; 2021: 1.1; 2022: 1.1; 2023: 1.4; 2024: 1.1; 2025: 1.1; 2030: 1.5; 2040: 4.2.

### Financing strategy and support assumed
- DSA incorporates a proposed RCF disbursement equivalent to 50 percent of quota, together with prospective concessional financing from other development partners, including the World Bank’s COVID-19 Emergency Response Project.
- World Bank support noted: a US$14.25 million COVID-19 Emergency Response Project and a supplemental DPO in an amount of US$100 million.
- Assumption on Bugesera international airport financing: government will take on 40 percent of total cost of US$1.3 billion as guaranteed debt under commercial loan financing conditions, while Qatar Airways will take on 60 percent as FDI.
- Authorities have not requested debt service suspension under the Debt Service Suspension Initiative (DSSI).

### Debt sustainability findings (baseline and outlook)
- Mechanical risk rating under the external DSA: Moderate.
- Mechanical risk rating under the public DSA: Moderate.
- Risk of external debt distress: Moderate.
- Overall risk of debt distress: Moderate.
- Rwanda’s Composite Indicator (CI) score: 3.26 (above upper threshold 3.05).
- Present value (PV) of total public debt projected to peak at 53 percent of GDP in 2025.
- Selected public and external debt indicators (baseline projections, percent of GDP unless otherwise noted):
  - External debt (nominal): 2019: 53.9; 2020: 63.1; 2021: 70.4; 2022: 71.8; 2023: 71.8; 2024: 72.8; 2025: 74.3; 2030: 77.2; 2040: 76.5.
  - of which: public and publicly guaranteed (PPG): 2019: 45.6; 2020: 55.0; 2021: 61.9; 2022: 63.0; 2023: 62.8; 2024: 63.4; 2025: 64.3; 2030: 64.7; 2040: 56.6.
  - PV of PPG external debt-to-GDP ratio (selected years shown in table columns): 29.3; 34.0; 37.7; 38.2; 38.5; 39.5; 40.8; 41.5; 37.5.
  - PV of PPG external debt-to-exports ratio (selected): 137.1; 259.3; 177.9; 169.2; 143.9; 155.7; 159.4; 149.7; 115.4.
  - PPG debt service-to-exports ratio (percent): 2017: 6.5; 2018: 7.8; 2019: 7.5; 2020: 22.6; 2021: 12.0; 2022: 11.2; 2023: 20.3; 2024: 9.2; 2025: 8.7; 2030: 9.1; 2040: 13.2.
  - PPG debt service-to-revenue ratio (percent): 2017: 7.8; 2018: 8.7; 2019: 8.2; 2020: 19.2; 2021: 15.3; 2022: 14.9; 2023: 31.0; 2024: 13.0; 2025: 12.0; 2030: 12.8; 2040: 18.6.
  - PV of public debt-to-GDP ratio (public DSA): 2019: 42.8; 2020: 48.2; 2021: 52.5; 2022: 52.5; 2023: 51.9; 2024: 52.4; 2025: 53.0; 2030: 50.2; 2040: 50.0.
  - Public sector debt (percent of GDP): 2019: 58.5; 2020: 68.1; 2021: 75.7; 2022: 76.3; 2023: 75.3; 2024: 75.2; 2025: 75.5; 2030: 72.3; 2040: 68.2.
  - Debt service-to-revenue and grants ratio (public DSA, percent): 2017: 26.5; 2018: 29.3; 2019: 27.0; 2020: 40.2; 2021: 41.4; 2022: 42.5; 2023: 54.5; 2024: 39.7; 2025: 37.1; 2030: 31.3; 2040: 34.7.
  - Gross financing need (public DSA, percent of GDP): 2017: 8.4; 2018: 9.0; 2019: 13.2; 2020: 18.3; 2021: 16.5; 2022: 13.9; 2023: 16.4; 2024: 13.1; 2025: 12.2; 2030: 10.9; 2040: 11.6.

### Stress tests, vulnerabilities, and risk drivers
- Movement from "low" to "moderate" risk of external and overall debt distress relative to previous DSA (April 2020) due to COVID-19.
- Solvency indicators (PV external debt-to-GDP and PV total public debt-to-GDP) remain below indicative thresholds under baseline and most extreme shock.
- COVID-19 shock causes temporary breaches in 2020 under baseline for:
  - PV of external debt-to-exports ratio (breach).
  - External debt service-to-exports ratio (liquidity breach).
- A servicing spike in external debt service in 2023 (rollover of 10-year Eurobond issued in 2013) causes a one-off breach to debt service-to-revenue ratio under baseline.
- Most extreme shock scenarios produce multiple breaches, especially through uncertainty around exports and market-financing shocks (e.g., halving maturity of a 10-year Eurobond expected to be issued in 2023).
- Stress-test sensitivity highlights (Table 3 & 4 excerpts):
  - PV of debt-to-GDP (baseline row, percent): 2020: 34.0; 2021: 37.7; 2022: 38.2; 2023: 38.5; 2024: 39.5; 2025: 40.8; 2026: 41.2; 2027: 41.5; 2028: 41.5; 2029: 41.4; 2030: 41.5.
  - PV of debt-to-exports (baseline row, percent): 2020: 259.3; 2021: 177.9; 2022: 169.2; 2023: 143.9; 2024: 155.7; 2025: 159.4; 2026: 158.1; 2027: 155.7; 2028: 153.1; 2029: 150.9; 2030: 149.7.
  - Debt service-to-exports (baseline row, percent): 2020: 22.6; 2021: 12.0; 2022: 11.2; 2023: 20.3; 2024: 9.2; 2025: 8.7; 2026: 8.3; 2027: 8.4; 2028: 8.6; 2029: 8.7; 2030: 9.1.
- Qualification of the moderate risk category: DSA notes Rwanda has "limited space to absorb shocks."

### Policy recommendations and debt management implications
- Authorities should pursue a proper debt management strategy to:
  - Hold enough liquidity buffers for the crisis.
  - Smooth out the debt servicing profile to reduce rollover risks.
- Government needs to adopt a credible fiscal consolidation path as soon as the COVID-19 crisis abates.
- In line with IMF safeguards policy, authorities reiterate commitment to:
  - Undergo an update of the 2016 safeguards assessment before IMF Board approval of any subsequent arrangement to which the safeguards policy applies.
  - Provide IMF staff with the central bank’s most recently completed external audit reports.
  - Authorize external auditors to hold discussions with IMF staff.
- Authorities authorize IMF to publish the Letter and the staff report for the request for disbursement under the RCF.

### Additional notable items and metrics
- DSA coverage: central government and state-owned enterprises (SOEs); no change in debt coverage since July 2019 DSA (IMF CR 19/211).
- Nominal dollar GDP growth (selected entries): 2017: 5.9; 2018: 4.1; 2019: 5.1; 2020: 3.0; 2021: 1.8; 2022: 7.9; 2023: 10.7; 2024: 9.2; 2025: 8.1; 2030: 9.3; 2040: 8.6.
- Grant element of new public sector borrowing (selected percentages from table): 41.8; 46.4; 44.6; 26.1; 34.4; 33.7; 38.9; 28.7; 39.6.
- Net FDI (negative = inflow, percent of GDP): 2017: -2.7; 2018: -2.9; 2019: -3.3; 2020: -1.2; 2021: -2.4; 2022: -3.1; 2023: -3.2; 2024: -3.4; 2025: -3.6; 2030: -4.0; 2040: -4.6.

*The Debt Sustainability Analysis was prepared jointly by the staffs of the International Monetary Fund and the International Development Association. June 4, 2020.*

### 2020. This swift emergency financing

### 1rwaea2020003 - 2020. This swift emergency financing

### Affected economic activity and projections
- Real GDP growth for 2020 revised from 5.1 percent (at RCF-1) to 2 percent.
- Real GDP growth was 10.1 percent in 2019.
- Inflation expected to rise to 6.9 percent in 2020, driven by high food prices in the first half of the year caused by rain-damaged food crops.
- Tax revenue underperformed, 9.7 percent below target in the first quarter of the year.
- Fiscal deficit for the 2020–21 period is expected to deteriorate further relative to RCF-1 due to higher COVID-19-related spending in the current fiscal year and larger-than-anticipated revenue losses in FY 20/21.
- Authorities project an economic rebound of 6.3 percent in 2021 under the Economic Recovery Plan (ERP).
- Authorities note risks that a more protracted pandemic at the global and regional level may delay the recovery and have further negative implications for growth and government finances.

### COVID-19 epidemiological and containment context
- Confirmed cases rose to 431 with two casualties reported as of June 6, compared to 70 cases as of March 29.
- Stringent lockdown and containment measures being eased gradually since early May; schools, bars and other places of public gatherings remain closed.
- Increased use of online services for taxpayers and halted on-site operations.
- Mobile money transactions increased significantly as promoted by the Banque Nationale du Rwanda (BNR).
- Partial reopening alongside acceleration of mass screening, testing, digital contact tracing and mandatory wearing of face masks.

### External sector and balance of payments
- Exports growth fell from 49 percent y-o-y in January to 4 percent y-o-y in March.
- Imports growth dropped from 42 percent to 14 percent over the same period.
- Current account deficit projected to widen to 16.7 percent of GDP from the 16.0 percent of GDP envisaged in RCF-1.
- Declines in exports, remittances, and non-budgetary grants outweigh lower imports.
- More depressed investor sentiment expected to negatively impact FDI inflows further.

### Government Economic Recovery Plan (ERP) and fiscal measures
- Government response costs about USD 311 million (3.3 percent of GDP over the current fiscal year and the next).
- ERP consists of two pillars:
  - Economic Recovery Fund (ERF): allocates public funds to subsidize loans to firms in hardest-hit sectors and support programs for affected households; includes credit guarantees to SMEs and micro businesses in the informal sector and direct assistance to the national airline company.
  - Household programs: cash transfers to casual workers, food distribution, subsidized access to agricultural inputs, and measures to ensure poor households’ access to basic health and education.
- Authorities intend to seek concessional financing to close the residual financing gap.
- Commitment to ensure COVID-19 related spending is well-targeted, cost-effective, transparent and does not crowd out other priority areas.
- Authorities committed to ensuring transparency and accountability in the use of public funds, including RCF resources.

### Fiscal policy stance and debt sustainability
- Authorities will continue to relax the fiscal stance to accommodate the larger-than-anticipated impact of the pandemic.
- Authorities intend to embark on a growth-friendly fiscal consolidation when the pandemic recedes, with the view to preserving debt sustainability.
- Staff assessment: Rwanda’s debt remains sustainable, though the risk of external and overall debt distress moved from low in the April 2020 DSA to moderate.
- Authorities understand the change is explained by the impact of the global COVID-19 crisis and are committed to taking necessary actions to preserve debt sustainability and possibly improve the debt ranking as the temporary crisis abates.

### Monetary, financial, and exchange rate policies
- BNR cut the policy rate by 50 basis points at the April Monetary Policy Committee meeting to 4.5 percent.
- BNR lowered banks’ reserve requirement ratio from 5 to 4 percent on April 1, boosting liquidity to the financial sector by 0.2 percent of GDP.
- Steps planned to support microfinance institutions to enhance lending to micro and small businesses in the informal sector.
- BNR will continue to keep monetary policy data-dependent and closely monitor price developments for any further action.
- BNR allowed banks to ease loan repayment conditions for affected borrowers; measures include principal and/or interest payment moratoria for at least 3 months and waivers for late payment penalties and loan restructuring fees.
- Monthly reporting and monitoring requirements introduced for restructured loans to safeguard financial stability.
- Charge-free digital procedures and mobile payments are being promoted to contain virus transmission through bank notes.
- Authorities committed to maintaining exchange rate flexibility as a shock absorber and agree to limit foreign exchange market interventions to avoid excessive exchange rate volatility.
- Authorities expect Fund and development partner support to help restore an adequate international reserve cover.

### Financing request and rationale
- Authorities welcome the Fund’s decision to increase the annual access limit under the RCF’s exogenous shock window from 50 percent of quota to 100 percent of quota.
- Authorities request additional assistance under the RCF in the amount of SDR 80.1 million, equivalent to 50 percent of Rwanda’s quota.
- Rationale: additional disbursement would help address urgent balance of payments needs, contribute to closing the financing gap, further support the economy, and mitigate the overall impact of the pandemic.
- The Fund’s early emergency assistance under RCF-1 has helped catalyze additional donor support, but BOP needs and the financing gap remain large.

### Conclusion and appeal
- The global COVID-19 pandemic and domestic containment measures have taken a heavier toll on the Rwandan economy.
- Additional assistance would be instrumental in the authorities’ response going forward.
- Request for Executive Directors’ support for an additional disbursement under the Rapid Credit Facility.

*IMF staff summary of Rwanda authorities’ request and economic assessment.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1rwaea2020003.pdf_