## _cr12152 — Selected Economic and Financial Indicators, 2008–17

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### Recent developments and program performance
- Real GDP growth in 2011: 8.6 percent.
- Headline inflation: 8.3 percent (end-2011); 8.2 percent (March 2012). Core inflation: 5.3 percent (March 2012).
- Balance of payments: sizable surplus in 2011; current account deficit (including grants) worsened to 7.3 percent of GDP (est. 2011).
- Gross (unencumbered) reserves: almost five months of imports at end-2011.
- Fiscal: fiscal deficit for July–December 2011 about 1 percent of GDP lower than programmed; FY 2011/12 program on track to reduce fiscal deficit to just below 2 percent of GDP (from 3.4 percent in FY 2010/11).
- Program performance: authorities met all quantitative assessment criteria for end-December 2011 under the PSI; structural benchmarks experienced delays but are expected by end-May, end-June, or end-July 2012 as noted.

### Poverty reduction and social indicators (Box 1)
- Poverty headcount ratio (national poverty line): 56.7 percent (2005/06) → 44.9 percent (2010/11).
- Poverty at $1.25 a day (PPP): 72.1 percent (2006) → 63.2 percent (2011).
- Fertilizer use: 18 percent (2005/06) → 38.3 percent (2010/11).
- Marketed agricultural output: 21.5 percent → 26.9 percent.
- Non-farm jobs increased by 60 percent over five years.
- Access to clean drinking water: 70.3 percent → 74.2 percent; sanitation: 58.5 percent → 74.5 percent.
- Primary net attendance: 86.6 percent → 91.7 percent; secondary: 10.4 percent → 20.9 percent.
- Urban electrification (households using electricity to light homes): 23.1 percent → 46 percent; rural electrification: 0.7 percent → 4.7 percent.
- Access to credit: households with access to credit 57.8 percent → 73.7 percent; individuals with a savings account 9.2 percent → 20.6 percent.
- Gini coefficient: 0.52 (2005/06) → 0.49 (2010/11); 90th/10th consumption ratio: 7.1 → 6.4.

### Monetary and financial developments
- Policy rate changes: +100 basis points cumulatively in October and November 2011; raised by 50 basis points to 7.5 percent in May 2012. Repo rate remained negative in real terms.
- Broad money growth: exceeded program targets; growth driven by credit to private sector (private credit growth 27.9 percent at end-2011).
- Broad money (M2) annual growth: 26.8 percent (end-2011).
- Monetary aggregates aligned with nominal GDP growth of 16.7 percent (period referenced).
- Reserve money and NFA targets achieved at end-December 2011 after upward targets review in November 2011.
- Liquidity management reforms: liquidity forecasting horizon extended from 1 week to 6 months; fixed REPO/reverse REPO maturity to seven days from February 29, Key REPO Rate used as maximum/minimum for seven-day operations.
- Money market rates: 7 percent (June 2011) → 8.1 percent (December 2011).
- Banking soundness: regulatory capital to risk-weighted assets 23.8 percent (end-2011) from 21.6 percent (end-2010). Non-performing loans: 11.3 percent (end-2010) → 8.2 percent (end-2011).
- SACCOs: all 416 authorized to grant loans; 273 fully licensed (up to 40% of deposits), others up to 20% of deposits. NBR hired 60 inspectors for SACCO supervision; Bank Supervision Department comprises 18 inspectors.

### Fiscal developments and policy stance
- Key fiscal ratios (percent of GDP, fiscal-year basis, selected):
  - Revenue: 12.6 (2008), 14.9 (2009), 12.6 (2010), 13.9 (2011), 13.7 (est. 2011), 14.1 (proj. 2012), 13.8 (2013), 14.0 (2014), 14.3 (2015), 14.6 (2016), 14.9 (2017), 15.2 (2017).
  - Grants: 9.9 (2008), 9.3 (2009), 13.2 (2010), 10.9 (2011), 10.7 (est. 2011), 11.1 (proj. 2012), 11.3 (2013), 11.4 (2014), 10.6 (2015), 7.6 (2016), 7.2 (2017), 6.2 (2017).
  - Government expenditure and net lending: 22.6 (2008), 26.4 (2009), 25.9 (2010), 28.3 (2011), 27.9 (est. 2011), 27.2 (proj. 2012), 26.9 (2013), 28.0 (2014), 27.8 (2015), 24.5 (2016), 23.7 (2017), 23.0 (2017).
  - Overall fiscal balance (including grants): -0.2 (2008), -2.2 (2009), -0.1 (2010), -3.5 (2011), -3.4 (est. 2011), -1.9 (proj. 2012), -1.9 (2013), -2.6 (2014), -2.9 (2015), -2.3 (2016), -1.6 (2017), -1.6 (2017).
- July–December 2011: total revenue in line with projections; excess tax revenue offset shortfall in non-tax revenue; investment spending lower than planned due to delays in domestically financed capital projects.
- FY 2012/13 budget priorities: increase domestic revenue mobilization; accommodate Pay and Retention wage increases; domestically financed capital spending to reduce poverty.
  - Domestic revenue projections: 13.8 percent of GDP (2011/12) → 14.0 percent of GDP (2012/2013) → 14.3 percent of GDP (2013/2014); medium-term rise average 0.3 percent of GDP per annum to reach 14.9 percent of GDP by 2015/2016.
  - Total outlays projected: rise to 28 percent of GDP in 2012/2013; decline to 23.7 percent of GDP by 2015/2016.
  - Overall deficit (including grants) projected to decline from 2.6 percent of GDP in 2012/2013 to 1.6 percent of GDP in 2015/2016.
- Revenue measures for 2012/13 (selected, revenue impact noted):
  1. Increase in tax rates for imported construction materials by 5 percent on average (Rwf 1 billion).
  2. Revision of the investment code by June 2012 — revenue of 0.1 percent of GDP.
  3. Introduce Gaming tax (Rwf 1 billion).
  4. Introduce Electronic Sales Register (ERS) — revenue of 0.2 percent of GDP.
  - PAYE from salary increases to yield 0.2 percent of GDP.
- SME tax regime (revenue neutral): SMEs turnover RWF 12 million–RWF 50 million taxed at 3 percent (instead of 4 percent); micro enterprises turnover RWF 2 million–RWF 12 million in four bands with flat tax amounts RWF 60,000 to RWF 300,000 per annum.
- Transparency: Quarterly budget execution reports to be published within 45 days from the end of each quarter (continuous structural benchmark).

### External sector, reserves, and medium-term outlook
- Current account balance (including official transfers, percent of GDP): -4.9 (2008), -7.3 (2009), -5.9 (2010), -10.6 (2011), -7.3 (est. 2011), -12.7 (proj. 2012), -10.0 (2013), -9.7 (2014), -10.4 (2015), -7.2 (2016), -6.3 (2017), -5.9 (2017).
- Gross official reserves (months of imports of G&S): 4.7 (2008), 5.4 (2009), 4.5 (2010), 4.6 (2011), 5.1 (est. 2011), 4.2 (proj. 2012), 5.0 (2013), 4.4 (2014), 4.4 (2015), 4.4 (2016), 4.0 (2017), 3.8 (2017).
- Exports in 2011: stronger-than-expected (mainly coffee, tea, minerals) due to high commodity prices; imports strong, buoyed by domestic demand.
- After large surplus in 2011, balance of payments expected to record a small deficit in 2012; international reserves expected to decline gradually to about four months of imports by 2016 but remain at comfortable levels (assessment).

### Medium-term growth and inflation projections (Text Table 1 / Selected series)
- Real GDP growth (percent): 11.2 (2008), 4.1 (2009), 7.2 (2010), 8.8 (2011), 8.6 (est. 2011), 7.7 (proj. 2012), 7.7 (2013), 7.5 (2014), 7.2 (2015), 7.0 (2016), 7.0 (2017), 6.5 (2017).
- Consumer prices (end of period, percent): 22.3 (2008), 5.7 (2009), 0.2 (2010), 8.7 (2011), 8.3 (est. 2011), 7.5 (proj. 2012), 7.5 (2013), 6.5 (2014), 5.0 (2015), 5.0 (2016), 5.0 (2017), 5.0 (2017).
- Macro outlook summary: output growth expected to ease to 7.7 percent in 2012 and stabilize around 7 percent thereafter; inflation projected to decline to about 7.5 percent by end-2012 and converge to 5 percent in the medium term. Current account to widen in near term due to investment-related imports but be supported by private and official capital inflows.

### Risks and policy emphasis
- Principal risks: uncertain global environment with risks to growth and inflation (renewed global slowdown or higher world fuel prices could threaten growth, revenue, and inflation objectives).
- Staff policy priorities and recommendations:
  - Preserve macroeconomic stability in the short term.
  - Sustainably accelerate exports and growth, commit to export diversification strategy.
  - Maintain prudent fiscal policy while accommodating higher foreign-financed capital expenditures consistent with medium-term macroeconomic stability.
  - Tighten monetary policy to bring inflation toward the 5 percent objective while monitoring real policy rates and credit growth.
  - Continue implementation of structural reforms and benchmarks (electronic registries, own DSA, MTDS submission to cabinet and parliament as scheduled).
  - Delay non-priority spending rather than resort to additional domestic financing if revenue falls short.

### Program implementation and structural benchmarks (selected)
- Program modifications supported: modify end-June 2012 quantitative assessment criteria; set end-December 2012 criteria; adjust NFA, reserve money, NDF, and NCB ceiling (US$240 million → US$255 million untied) to reflect budget and monetary program.
- Structural benchmarks (selected with target dates):
  - Complete IFMIS detailed system and technical requirements — End-September 2012.
  - Introduce a fully collateralized standing short-term lending facility — End-June 2012.
  - NBR study to assess exchange rate developments — End-September 2012.
  - Submit NES financing plan to IDEC — End-December 2012.
  - Adopt harmonized credit policy for SACCOs — End-September 2012.
  - Complete rating of SACCOs and selection for consolidation at district level — End-December 2012.
- Program reporting requirements: weekly data within seven days; monthly data within five weeks; authorities to notify IMF at least ten business days prior to policy changes that could affect program outcomes.

---

### Box 2 — Optimal Level of Reserves for EAC Countries (summary)
- Method: IMF Executive Board March 2011 approach for LICs treats reserves as precautionary liquidity buffers. Unit cost of holding reserves (r) assumed in range 2–6 percent; methodology assumes risk neutrality (estimates are a lower bound).
- Current context: EAC reserve coverage converged around five months of imports (except Kenya); EAC convergence criterion requires >6 months of imports.
- Key findings (assume 4 percent unit cost):
  - Kenya: optimal reserves 1.4 months of imports.
  - Rwanda: optimal reserves 5.1 months of imports.
- Sensitivity for Rwanda: optimal reserves range from 3 months to 9.4 months of imports depending on unit cost assumption.
- Drivers of high optimal reserves for Rwanda:
  - De facto fixed exchange rate regime increases crisis probability/cost; flexible exchange rate could reduce optimal reserves.
  - Vulnerability to exogenous shocks (terms of trade and aid shocks).
- Policy implications:
  - Exchange rate flexibility would lower optimal reserve needs.
  - Export diversification and reduced aid dependency over the medium term would lower optimal reserve needs.
  - Estimates highly sensitive to unit cost and risk-preference assumptions.

### Box 4 — DSA Update (summary)
- External DSA: Rwanda’s debt dynamics assessed as sustainable, but vulnerabilities remain due to low export base.
- Baseline changes vs. previous DSA:
  - Higher PV of debt reflecting higher concessional resources (mainly IDA project loans starting in 2011) and higher assumed commercial borrowing to fill financing gap for investment plan.
  - Higher upfront debt service payments; peak PV of external debt to exports shifted out to around 2014.
  - Citibank bridge loan for Kigali Convention Centre (KCC): contracted August 2011 for $100 million one-year renewable bridge loan; authorities drew $40 million in 2011. DSA assumes drawdown of subsequent tranches and roll over over 2012-14; baseline assumes long-term financing secured in 2014; authorities seeking longer-term funding to replace bridge loan.
- Debt service: increases temporarily in 2013 and 2014 but remain below thresholds under baseline and stress tests.
- Fiscal DSA / domestic public debt:
  - Domestic public debt expected to increase gradually; PV of domestic public debt expected to remain at around 20 percent of GDP. Most extreme stress-test outcome increases this to around 31 percent of GDP.
- Composition of public debt (End–2011, amounts in millions, percent of US$, percent of Total, percent of GDP):
  - Total (external + domestic): 1,597 100 25.3
  - External debt: 1,135 71 18.0
  - Central government: 1,007 63 16.0
  - Multilateral: 830 52 13.2
    - IMF: 14 1 0.2
    - IDA: 394 25 6.3
    - AfDB: 218 14 3.5
    - Other multilateral: 203 13 3.2
  - Official bilateral: 177 11 2.8
    - Paris Club: 28 2 0.4
    - Non-Paris Club: 149 9 2.4
  - Guaranteed by the central government: 128 8 2.0
  - Domestic debt: 462 29 7.3
  - Billion RF: 279 29 7.3
  - Short-term government and central bank: 175 18 4.6
- Program adjustments supported by staff: revise end-June 2012 quantitative assessment criteria and set end-December 2012 criteria; revise NFA, reserve money, NDF, NCB ceiling (US$240 million → US$255 million untied); adjust indicative targets for domestic revenue, priority expenditure, and consolidated domestic debt.
- Structural benchmarks for 2012 (selected and macroeconomic rationale provided):
  1. IFMIS technical requirements — End-September 2012 (improve budget preparation, implementation, reporting).
  2. Standing short-term lending facility (fully collateralized) — End-June 2012 (improve monetary policy implementation).
  3. NBR exchange rate study — End-September 2012 (support exchange rate policy and export competitiveness).
  4. NES financing plan submission to IDEC — End-December 2012 (widen export base).
  5. Harmonized credit policy for SACCOs — End-September 2012 (expedite supervision).
  6. Rating of SACCOs and selection for consolidation — End-December 2012 (expedite supervision).
- Staff appraisal highlights:
  - Commends strong performance; all quantitative criteria met for end-December 2011; most structural benchmarks met with delays.
  - Outlook positive but risks from global setbacks and higher fuel prices.
  - Fiscal framework for 2012/13 aligned with PSI; budget grants ~40 percent of government resources remain (aid dependence).
  - Monetary recommendations: slight tightening to keep inflation single-digit; NBR should be more proactive; reforms to liquidity management welcomed (six-month forecasting, seven-day repo/reverse repo); further reforms needed to improve money and FX market functioning and to manage SACCO consolidation carefully.

### Appendix DSA and Sensitivity Analysis (selected highlights)
- DSA key macro and fiscal aggregates (selected series):
  - Nominal GDP (RF billions, selected): 2,964; 3,257; 3,801; 4,409; 5,109; 5,828; 6,567; 7,412; 8,325; 14,558; 25,456; 44,514.
  - Real GDP (percentage change, selected): 4.1; 7.2; 8.6; 7.7; 7.5; 7.2; 7.0; 7.0; 6.5; 6.5; 6.5; 6.5.
  - Exports of goods, f.o.b. (US$ millions, 2008–2017): 267.7, 235.0, 297.3, 404.4, 464.2, 421.4, 467.0, 492.9, 517.7, 527.1, 570.0, 625.8.
  - Imports of goods, f.o.b. (US$ millions, 2008–2017): 880.7, 999.2, 1,084.0, 1,575.7, 1,563.8, 1,653.6, 1,778.4, 1,771.9, 1,841.4, 1,626.5, 1,707.1, 1,824.1.
  - Gross official reserves (US$ millions, 2008–2017): 596.4, 742.2, 814.2, 894.2, 1,051.2, 786.6, 1,042.0, 950.4, 895.4, 940.1, 912.0, 943.4.
  - Gross reserves (months of imports, 2008–2017): 4.7, 5.4, 4.5, 4.6, 5.1, 4.2, 5.0, 4.4, 4.4, 4.4, 4.0, 3.8.
- Public sector debt (baseline, selected): 23.0; 23.4; 25.9; 25.2; 24.9; 23.6; 22.4; 20.9; 19.4; 20.0; 20.5; 21.1; ... up to 23.6.
- Sensitivity analysis (Appendix Table 6, selected outcomes):
  - Baseline PV of Debt-to-GDP Ratio (percent, selected): 79 86 89 85 83 78 71 82 (panel sample).
  - Alternative scenarios (A1–A3 and bound tests B1–B5) produce divergent paths; representative snapshots:
    - Baseline (2012–2017 and beyond): Baseline: 20 21 20 19 18 17 14 17 (selected table entries).
    - A1 (historical-average growth & primary balance): 19 17 14 13 12 10 5 3.
    - A2 (primary balance unchanged from 2011): 18 16 13 11 9 7 0 -6.
    - A3 (permanently lower GDP growth): 21 21 20 19 18 17 20 36.
    - B4 (one-time 30 percent real depreciation in 2012): 27 25 24 23 21 19 17 19.
    - B5 (10 percent of GDP increase in other debt-creating flows in 2012): 29 28 26 25 23 21 19 20.

### Technical Memorandum of Understanding (TMU) — program scope and assessment criteria (selected)
- Coverage period: June 30, 2010–June 29, 2013 (PSI-supported).
- AC and IT indicators (end-June and end-December 2012 test dates; other dates are IT):
  - Floor on stock of net foreign assets (NFA) of NBR.
  - Ceiling on stock of reserve money.
  - Ceiling on flow net domestic financing (NDF) of central government.
  - Ceiling on contracting/guaranteeing of new nonconcessional external debt by public sector.
  - Ceiling on stock of external payment arrears of public sector.
  - ITs: floor on flow domestic revenue; ceiling on net accumulation of domestic arrears; ceiling on consolidated domestic debt; floor on flow priority spending.
- Program exchange rates used for 2012 and 2013 (end-December 2011 rates applied):
  - Rwanda Franc (per US$): 604.1410
  - Euro: 1.2866
  - British Pound: 1.5371
  - Japanese Yen (per US$): 77.7899
  - SDR: 1.5348
- NDF definition and adjusters: NDF = change in (i) net banking sector credit to government + (ii) non-bank holdings of government domestic debt; adjusters include shortfalls/excesses in budgetary loans and grants (cap US$80 million upward adjuster; excess over US$24 million downward adjuster), and expenditure for food imports in case of emergency.
- Programming of Global Fund grants under central government: US$198.2 million for 2012 (RWF 119.7 billion); quarterly distributions: US$0 (Jan–Mar 2012), US$86.3 million (Apr–June 2012), US$198.2 million (July–Sep 2012), US$198.2 million (Oct–Dec 2012).
- Limits on external nonconcessional borrowing: ceiling applies continuously from end-June 2010 to end-June 2013; exclusions listed (e.g., swap US$50 million, US$13.1 million aircraft purchase, Euro 8 million BRD loan, Bank of Kigali non-guaranteed borrowing).
- Public sector definition: central government, NBR, local governments, and entities with government controlling stake (>50%), excluding Bank of Kigali.
- Reporting requirements: weekly transmission of foreign assets/liabilities of NBR within seven days of end of week; monthly data within five weeks; authorities to furnish official program performance communication within 8 weeks of a test date.
- Programmed encumbered reserve assets (quarterly cumulative amounts): US$40.0 million (March 2012); US$40 million (June 2012); US$71 million (September 2012); US$71 million (December 2012).

### Reporting and data transparency (selected)
- Data transmission timetable for program monitoring:
  - Weekly: within seven days of end of each week (exchange rates, international reserve assets/liabilities, reserve/base money, central bank balance sheet details).
  - Monthly: within five weeks of end of each month (broad money, consolidated banking system balance sheet, revenue/expenditure balances, comprehensive tax lists, domestic arrears).
  - Annual/as available: stocks of public sector and public-guaranteed debt, external current account balance, exports/imports, GDP/GNP depending on series.
- Submission channel: electronic to IMF (email: afrrwa@imf.org) for program monitoring information.

### IMF engagement, technical assistance and program reviews
- PSI program approved June 16, 2010; fourth review completed June 7, 2012 (Executive Board decision on lapse of time basis); Executive Board approved modification of end-June 2012 assessment criteria.
- Macroeconomic performance (Press Release No. 12/209, June 8, 2012): Real GDP growth 8.6 percent (2011); inflation single digits (8.3 percent March 2012); all quantitative criteria met for end-December 2011; Rwanda at moderate risk of external debt distress.
- Technical assistance missions (2011–2012) listed across STA, MCM, FAD, FAC, covering national accounts, payment systems, fiscal data, customs, monetary operations, AML/CFT, TSA, MTDS, and other areas.
- Future TA priorities: monetary/exchange rate management; supervision of bank and nonbank financial institutions; public finance management; tax policy and administration; compilation of national accounts statistics.

*Source: Rwanda — IMF staff report material contained in _cr12152 - 1. Selected Economic and Financial Indicators, 2008–17*

### 1. Selected Economic and Financial Indicators, 2008–17 _________________________________________ 26

### _cr12152 - 1. Selected Economic and Financial Indicators, 2008–17 _________________________________________ 26

### Recent developments and program performance
- Real GDP growth in 2011 is estimated at 8.6 percent, driven by a large increase in agricultural output in the second half of the year, robust exports, and strong domestic demand (construction and public expenditure).  
- Headline inflation reached 8.3 percent (year-on-year) at end-2011, up from 0.2 percent a year earlier. Inflation stood at 8.2 percent in March 2012; core inflation was 5.3 percent in March 2012.  
- The balance of payments recorded a sizable surplus in 2011; the current account deficit (including grants) worsened to 7.3 percent of GDP. Gross (unencumbered) reserves increased to almost five months of imports at end-2011.  
- The fiscal deficit for July–December 2011 was about 1 percent of GDP lower than programmed. For FY 2011/12 as a whole, the program is on track to reduce the fiscal deficit to just below 2 percent of GDP (from 3.4 percent in FY 2010/11).  
- The authorities met all quantitative assessment criteria for end-December 2011 under the PSI. Structural benchmarks experienced delays but have been or are expected to be completed by end-May, end-June, or end-July 2012 as noted.

### Poverty reduction and social indicators (Box 1)
- Poverty headcount ratio declined from 56.7 percent in 2005/06 to 44.9 percent in 2010/11 (national poverty line).  
- Poverty at $1.25 a day (PPP) fell from 72.1 percent in 2006 to 63.2 percent in 2011.  
- Use of fertilizers increased from 18 percent in 2005/06 to 38.3 percent in 2010/11; share of marketed agricultural output rose from 21.5 percent to 26.9 percent.  
- Non-farm jobs increased by 60 percent over the five-year period.  
- Access to clean drinking water rose from 70.3 percent to 74.2 percent; sanitation from 58.5 percent to 74.5 percent.  
- Primary net attendance rates increased from 86.6 percent to 91.7 percent; secondary from 10.4 percent to 20.9 percent.  
- Urban electrification: 46 percent of urban households use electricity to light homes (up from 23.1 percent); rural electrification: 4.7 percent (up from 0.7 percent).  
- Access to credit: share of households with access to credit increased from 57.8 percent to 73.7 percent; individuals with a savings account rose from 9.2 percent to 20.6 percent.  
- Gini coefficient declined from 0.52 in 2005/06 to 0.49 in 2010/11; the 90th/10th consumption ratio fell from 7.1 to 6.4.

### Monetary and financial developments
- Policy rate: two successive increases by a cumulative 100 basis points in October and November 2011; the policy rate was further raised by 50 basis points to 7.5 percent in May 2012. The repo rate has stayed negative in real terms.  
- Broad money growth exceeded program targets, fueled mainly by rapid growth in credit to the private sector.  
- Regulatory capital to risk-weighted assets rose to 23.8 percent at end-2011 from 21.6 percent a year earlier.  
- Non-performing loans declined from 11.3 percent to 8.2 percent between end-2010 and end-2011.  
- All 416 recently established Savings and Credit Cooperatives (SACCOs) authorized to grant loans, with most licensed to grant 40 percent of their deposits as loans and the rest 20 percent.

### Fiscal developments
- Revenue (fiscal-year basis) and grants: revenue and grants dynamics underpin fiscal balances in Text Table 1. Key fiscal numbers (percent of GDP) from Text Table 1 include:  
  - Revenue: 12.6 (2008), 14.9 (2009), 12.6 (2010), 13.9 (2011), 13.7 (est. 2011), 14.1 (proj. 2012), 13.8 (2013), 14.0 (2014), 14.3 (2015), 14.6 (2016), 14.9 (2017), 15.2 (2017).  
  - Grants: 9.9 (2008), 9.3 (2009), 13.2 (2010), 10.9 (2011), 10.7 (est. 2011), 11.1 (proj. 2012), 11.3 (2013), 11.4 (2014), 10.6 (2015), 7.6 (2016), 7.2 (2017), 6.2 (2017).  
  - Government expenditure and net lending: 22.6 (2008), 26.4 (2009), 25.9 (2010), 28.3 (2011), 27.9 (est. 2011), 27.2 (proj. 2012), 26.9 (2013), 28.0 (2014), 27.8 (2015), 24.5 (2016), 23.7 (2017), 23.0 (2017).  
  - Overall fiscal balance (including grants): -0.2 (2008), -2.2 (2009), -0.1 (2010), -3.5 (2011), -3.4 (est. 2011), -1.9 (proj. 2012), -1.9 (2013), -2.6 (2014), -2.9 (2015), -2.3 (2016), -1.6 (2017), -1.6 (2017).  
- Fiscal outcome for July–December 2011: total revenue in line with projections; excess tax revenue offset shortfall in non-tax revenue; spending mainly on investment was lower than planned due to delays in domestically financed capital projects.

### Balance of payments, reserves, and external positions
- Current account balance (including official transfers) in Text Table 1: -4.9 (2008), -7.3 (2009), -5.9 (2010), -10.6 (2011), -7.3 (est. 2011), -12.7 (proj. 2012), -10.0 (2013), -9.7 (2014), -10.4 (2015), -7.2 (2016), -6.3 (2017), -5.9 (2017).  
- Gross official reserves (months of imports of G&S) in Text Table 1: 4.7 (2008), 5.4 (2009), 4.5 (2010), 4.6 (2011), 5.1 (est. 2011), 4.2 (proj. 2012), 5.0 (2013), 4.4 (2014), 4.4 (2015), 4.4 (2016), 4.0 (2017), 3.8 (2017).  
- After a large surplus in 2011, the balance of payments is expected to record a small deficit in 2012. International reserves are expected to decline gradually to about four months of imports by 2016 but remain at comfortable levels.  
- Exports in 2011 were stronger-than-expected (mainly coffee, tea, minerals) due to high commodity prices; import growth was strong, buoyed by domestic demand.

### Medium-term outlook and projections
- Real GDP growth projections (Text Table 1): 11.2 (2008), 4.1 (2009), 7.2 (2010), 8.8 (2011), 8.6 (est. 2011), 7.7 (proj. 2012), 7.7 (2013), 7.5 (2014), 7.2 (2015), 7.0 (2016), 7.0 (2017), 6.5 (2017).  
- Consumer prices (end of period) projections (Text Table 1): 22.3 (2008), 5.7 (2009), 0.2 (2010), 8.7 (2011), 8.3 (est. 2011), 7.5 (proj. 2012), 7.5 (2013), 6.5 (2014), 5.0 (2015), 5.0 (2016), 5.0 (2017), 5.0 (2017).  
- The macroeconomic outlook: output growth expected to ease to 7.7 percent in 2012 and stabilize around 7 percent thereafter. Inflation projected to decline to about 7.5 percent by end-2012 and converge to 5 percent in the medium term. The current account is expected to widen in the near term due to investment-related imports but be supported by private and official capital inflows.

### Risks and policy emphasis
- Principal risks: uncertain global environment implying risks to growth and inflation. The mission cautioned authorities to remain realistic and vigilant to preserve macroeconomic stability gains.  
- Policy priorities and recommendations discussed:  
  - Preserve macroeconomic stability in the short term.  
  - Sustainably accelerate exports and growth over the medium term, including commitment to export diversification strategy.  
  - Maintain prudent fiscal policy while accommodating higher foreign-financed capital expenditures consistent with medium-term macroeconomic stability.  
  - Tighten monetary policy to bring inflation toward the 5 percent objective while monitoring real policy rates and credit growth.  
  - Continue implementation of structural reforms and benchmarks (electronic registries, own DSA, MTDS submission to cabinet and parliament as scheduled).

*Source: Rwanda — IMF staff report material contained in _cr12152 - 1. Selected Economic and Financial Indicators, 2008–17*

### Box 2. Optimal Level of Reserves for EAC Countries

### Box 2. Optimal Level of Reserves for EAC Countries

### Overview
- Assesses optimal reserve levels for East African Community (EAC) countries using the IMF Executive Board March 2011 approach for low-income countries (LICs), which treats reserves as precautionary liquidity buffers.
- Notes absence of an agreed methodological framework for LICs and that assessing reserve adequacy is an ongoing exercise; Executive Directors encouraged further analysis and refinement.

### Context and Current Coverage
- Reserve coverage in the EAC countries has converged around five months of imports in the past few years, except in Kenya.
- This convergence has been facilitated by robust capital inflows, especially official transfers, and is in line with the EAC convergence criterion requiring member countries to maintain reserve coverage of more than six months of imports.
- Raises the question: is the optimal level of reserves the same for all five EAC members?

### Methodology
- Optimal reserves are derived by maximizing the net benefit (benefit minus cost) of holding reserves.
- Benefit: decline in the probability and cost of a crisis, given country-specific fundamentals and shocks.
- Cost: unit cost of holding reserves (r) is gauged using a range of 2–6 percent for r.
- The methodology assumes risk neutrality; estimates therefore constitute a lower bound on appropriate reserve levels.

### Key Findings
- Optimal reserve levels could differ significantly across EAC members depending on country-specific characteristics.
- Example numerical results (assuming a 4 percent unit cost of reserves):
  - Kenya: optimal reserves of 1.4 months of imports.
  - Rwanda: optimal reserves of 5.1 months of imports.
- Sensitivity for Rwanda to unit cost assumption:
  - Optimal reserve level for Rwanda ranges from 3 months to 9.4 months of imports depending on the assumed unit cost of reserves.

### Drivers of High Optimal Reserves for Rwanda
- Two main factors contribute to Rwanda’s relatively high optimal reserve level:
  - De facto fixed exchange rate regime: empirical analyses indicate a flexible exchange rate could considerably reduce the probability and cost of a crisis by facilitating adjustment of domestic absorption to an external shock.
  - Vulnerability to exogenous shocks: Rwanda has experienced relatively large shocks to the terms of trade and aid in the past decade.

### Policy Implications and Recommendations
- Exchange rate flexibility:
  - Shifting to a flexible exchange rate regime would significantly lower the optimal reserve level for Rwanda by reducing crisis probability and cost.
- Structural resilience:
  - Diversifying exports and reducing aid dependency over the medium term would also lower the optimal reserve level for Rwanda.
- Recognize sensitivity and uncertainty:
  - Optimal reserve estimates are highly sensitive to assumptions about the unit cost of reserves and to the risk preferences implicit in the methodology (assumes risk neutrality).

*Source: Box 2. Optimal Level of Reserves for EAC Countries — excerpt from _cr12152.*

### Box 4. DSA Update

### Box 4. DSA Update

### External debt dynamics and baseline changes
- The results of the external DSA confirm that Rwanda’s debt dynamics are sustainable.
- Vulnerabilities remain owing to Rwanda’s low export base, similar to previous DSA assessments.
- Main changes to the baseline compared to the previous DSA:
  - Higher present value (PV) of debt, reflecting higher concessional resources—mainly International Development Association (IDA) project loans starting in 2011—and higher assumed commercial borrowing to fill the financing gap of the authorities’ proposed investment plan.
  - Higher upfront debt service payments.
  - To a lesser extent, higher GDP, exports, and domestic revenue.
- Timing/profile changes:
  - On a PV basis, the peak level of indebtedness is now assumed to occur slightly later than in the previous DSA, with the peak of the PV of external debt to exports shifted out to around 2014.
  - A large part of the non-concessional funding for the Kigali Convention Centre—previously expected in 2011—is now expected mainly in 2012–13.
  - Other financing, including for the purchase of new planes, has been pushed back and is now expected in 2012.
- Debt service and financing specifics:
  - Debt service payments increase temporarily in 2013 and 2014 compared to the previous DSA, but remain below the thresholds under the baseline and stress tests.
  - The higher debt service reflects repayment on a short-term bridge loan contracted from Citibank to finance Kigali Convention Center (KCC).
  - The Citibank loan was contracted in August 2011 for $100 million as a one-year renewable bridge loan; the authorities drew $40 million in 2011. The DSA assumes a drawdown of subsequent tranches, and roll over of current disbursements, over the course of 2012-14, in line with the authorities’ assumptions.
  - The baseline in the last DSA assumed long-term loan financing for this project; in the DSA update, this is assumed to be secured in 2014.
  - The authorities continue to seek longer-term funding to replace the bridge loan.

### Fiscal DSA and domestic public debt
- Conclusions of the fiscal DSA parallel those from the exercise for foreign debt.
- Domestic public debt is expected to increase gradually over the projection period.
- Present value of domestic public debt is expected to remain at only around 20 percent of GDP.
- The most extreme outcome from the stress tests sees this increasing only to around 31 percent of GDP.

### Composition of public debt, End–2011 (millions, percent of US$, percent of Total, percent of GDP)
- Total (external + domestic): 1,597 100 25.3
- External debt: 1,135 71 18.0
- Central government: 1,007 63 16.0
- Multilateral: 830 52 13.2
  - IMF: 14 1 0.2
  - IDA: 394 25 6.3
  - AfDB: 218 14 3.5
  - Other multilateral: 203 13 3.2
- Official bilateral: 177 11 2.8
  - Paris Club: 28 2 0.4
  - Non-Paris Club: 149 9 2.4
- Guaranteed by the central government: 128 8 2.0
- Domestic debt: 462 29 7.3
- Billion RF: 279 29 7.3
- Of which:
  - Short-term government and central bank: 175 18 4.6
- Source: Country authorities, IMF and World Bank staff calculations.

### Program issues and quantitative targets
- Authorities propose, and staff supports, modifications of end-June 2012 quantitative assessment criteria and the setting of such criteria for end-December 2012 to reflect the budget program and revised monetary program.
  - Net foreign assets (NFA) of the central bank will be revised upward to reflect higher build up in reserves in 2011 due to larger donor inflows.
  - Reserve money will be revised slightly upward to accommodate higher demand for liquidity from somewhat higher nominal GDP and continued increased financial deepening.
  - NDF will be revised downward to account for changes in timing of donor inflows.
  - The ceiling on NCB will be revised from US$240 million to US$255 million—and the ceiling is modified to untied—to accommodate a non-concessional line of credit for the BRD.
  - Indicative targets for domestic revenue, priority expenditure, and consolidated domestic debt will be adjusted to reflect revised assumptions and projections.
  - The indicative target for priority spending has been lowered; total spending by priority sector remains unchanged, with a reallocation from purchases of goods and services to wages and salaries; transfers have been separated into wage and subsidy components.

### Structural benchmarks for 2012 (additional measures)
- Public financial management:
  1. Complete the determination of the detailed system and technical requirements for the Integrated Financial Management Information System — End-September 2012
     - Macroeconomic rationale: To improve budget preparation, implementation, and reporting.
- Monetary policy:
  2. Introduce a (fully collaterized) standing short-term lending facility with related interest rate set at a margin above the key repo rate — End-June 2012
     - Macroeconomic rationale: To improve the implementation of monetary policy.
- External sector:
  3. Complete (by NBR) a study to assess exchange rate developments and identify the main determinants of the exchange rate with a view of supporting the implementation of the exchange rate policy and maintaining export competitiveness — End-September 2012
     - Macroeconomic rationale: To improve the implementation of exchange rate policy.
  4. Submit to the Industrial Development and Export Council a financing plan for the National Export Strategy — End-December 2012
     - Macroeconomic rationale: To widen the export base of Rwanda.
- Financial sector:
  5. Adopt (by NBR) a harmonized credit policy for SACCOs — End-September 2012
     - Macroeconomic rationale: To expedite supervision of the Umurenge SACCOs.
  6. Complete the rating of SACCOs and selection of those that qualify for consolidation at district level — End-December 2012
     - Macroeconomic rationale: To expedite supervision of the Umurenge SACCOs.
- Source: IMF staff and Rwandan authorities.

### Staff appraisal — key points
- Performance and implementation:
  - Authorities are commended for strong performance under the PSI-supported program.
  - All quantitative assessment criteria for end-December 2011 were met.
  - Most structural benchmarks were met, albeit some with delays.
  - Staff encourages timely implementation of structural measures and urges avoidance of further delays in submission of the MTDS to the cabinet.
- Outlook and risks:
  - Outlook for 2012 is generally positive but not without risk.
  - Growth is expected to remain high—spurred by agriculture, exports, and domestic demand—and inflation relatively modest.
  - Further global setbacks, including contraction in demand and higher world fuel prices, could threaten growth, revenue, and inflation objectives.
- Fiscal and budgetary assessments:
  - Fiscal framework for 2012/13 is in line with the main objectives of the PSI.
  - Tax revenue is projected to increase as a share of GDP but will be partly offset by a shortfall in non-tax revenue.
  - Budget grants are expected to remain broadly unchanged and to continue to account for around 40 percent of resources available to the government, underlining Rwanda’s aid dependence.
  - Temporary increase in spending as a share of GDP is for strategic investment intended to foster medium-term growth.
  - A planned increase in civil service salaries is appropriate given the freeze since 2006 and recruitment/retention needs.
  - Authorities should avoid cuts in purchases of goods and services in priority sectors that could hamper operations and maintenance.
- Monetary and financial market recommendations:
  - Staff welcomes authorities’ commitment to delay non-priority spending rather than resort to additional domestic financing if downside risks materialize and revenue falls short.
  - Slight tightening of monetary policy stance is aimed at maintaining inflation in the single digits; NBR needs to be more proactive in implementation to respond to inflationary pressures.
  - Staff welcomes ongoing reforms of the liquidity management framework, including extending liquidity forecasting to six months and limiting repo/reverse repo interventions to the seven-day maturity.
  - Planned future reforms include improving implementation of the required reserve ratio and introducing a new standing lending facility.
  - Additional reforms are needed to improve the functioning of the money market and the foreign exchange market:
    - NBR should be more responsive to market/liquidity developments and accept repo bids at higher rates than the key repo rate.
    - As the main supplier of foreign exchange to the market, the NBR should allow the foreign exchange rate to be more responsive to market pressures.
  - Authorities should carefully move forward plans to enhance financial access; SACCOs need to be well supervised and in good financial standing before consolidation into a large cooperative bank.

*Source: IMF staff and Rwandan authorities (Box 4, DSA Update).*

### 33.      Staff recommends the completion of

### _cr12152 - 33.      Staff recommends the completion of

### Staff recommendation
- Staff recommends the completion of the fourth review, the modification of assessment criteria for end-June 2012, the setting of end-December 2012 assessment criteria, and the approval of additional structural benchmarks for 2012 under the PSI-supported program based on Rwanda’s continued strong performance under and commitment to the program.

### Output and prices (selected indicators)
- Real GDP growth (2008–2017): 11.2, 4.1, 7.2, 8.8, 8.6, 7.6, 7.7, 7.5, 7.2, 7.0, 7.0, 6.5
- Real GDP (per capita) (2008–2017): 8.9, 2.0, 5.0, 6.6, 6.3, 5.4, 5.5, 5.3, 5.0, 4.8, 4.8, 4.3
- GDP deflator (2008–2017): 12.6, 11.0, 2.5, 4.8, 7.5, 7.7, 7.7, 7.8, 6.4, 5.3, 5.5, 5.5
- Consumer prices (period average) (2008–2017): 15.4, 10.3, 2.3, 6.0, 5.7, 8.1, 7.9, 7.0, 5.8, 5.0, 5.0, 5.0
- Consumer prices (end of period) (2008–2017): 22.3, 5.7, 0.2, 8.7, 8.3, 7.5, 7.5, 6.5, 5.0, 5.0, 5.0, 5.0

### External sector (selected indicators)
- Exports of goods, f.o.b. (Millions of U.S. Dollars, 2008–2017): 267.7, 235.0, 297.3, 404.4, 464.2, 421.4, 467.0, 492.9, 517.7, 527.1, 570.0, 625.8
- Of which: Coffee and tea (2008–2017): 92.0, 85.6, 111.8, 137.0, 138.5, 149.0, 141.8, 152.6, 163.9, 152.3, 165.1, 189.3
- Imports of goods, f.o.b. (Millions of U.S. Dollars, 2008–2017): 880.7, 999.2, 1,084.0, 1,575.7, 1,563.8, 1,653.6, 1,778.4, 1,771.9, 1,841.4, 1,626.5, 1,707.1, 1,824.1
- Trade balance (Millions of U.S. Dollars, 2008–2017): -613.0, -764.2, -786.7, -1,171.3, -1,099.6, -1,232.2, -1,311.4, -1,278.9, -1,323.7, -1,099.3, -1,137.1, -1,198.3
- Current account balance including official transfers (Millions of U.S. Dollars, 2008–2017): -230.1, -382.7, -331.7, -641.4, -463.0, -835.8, -694.9, -754.8, -877.0, -665.0, -633.5, -648.5
- Current account balance excluding official transfers (Millions of U.S. Dollars, 2008–2017): -676.1, -903.0, -986.4, -1,310.7, -1,210.3, -1,416.6, -1,499.4, -1,470.5, -1,496.1, -1,246.3, -1,207.0, -1,221.2
- Gross official reserves (including SDR allocation, Millions of U.S. Dollars, 2008–2017): 596.4, 742.2, 814.2, 894.2, 1,051.2, 786.6, 1,042.0, 950.4, 895.4, 940.1, 912.0, 943.4
- Gross reserves (months of imports of goods and services, 2008–2017): 4.7, 5.4, 4.5, 4.6, 5.1, 4.2, 5.0, 4.4, 4.4, 4.4, 4.0, 3.8

### Government finance (selected fiscal-year and percent of GDP series)
- Total revenue (excl. grants) (Percent of GDP, FY basis, series shown): 12.6, 14.9, 12.6, 13.9, 13.7, 14.1, 13.8, 14.0, 14.3, 14.6, 14.9, 15.2
- Total expenditure and net lending (Percent of GDP, FY basis): 22.6, 26.4, 25.9, 28.3, 27.9, 27.2, 26.9, 28.0, 27.8, 24.5, 23.7, 23.0
- Capital expenditure (Percent of GDP, FY basis): 8.2, 11.1, 10.2, 12.6, 12.4, 12.6, 12.4, 13.5, 13.1, 10.1, 9.4, 9.0
- Current expenditure (Percent of GDP, FY basis): 15.1, 14.5, 14.8, 15.1, 14.9, 14.6, 14.5, 14.3, 14.3, 13.8, 13.7, 13.4
- Primary fiscal balance (Percent of GDP, FY basis): -3.3, -2.2, -5.2, -5.1, -5.0, -4.4, -4.6, -3.8, -3.4, -2.7, -2.2, -1.6
- Domestic fiscal balance (Percent of GDP, FY basis): -5.6, -5.3, -8.1, -7.9, -7.8, -6.4, -6.7, -6.0, -5.7, -5.2, -4.6, -3.7
- Overall fiscal balance after grants (Percent of GDP, FY basis): -0.2, -2.2, -0.1, -3.5, -3.4, -1.9, -1.9, -2.6, -2.9, -2.3, -1.6, -1.6
- Overall fiscal balance before grants (Percent of GDP, FY basis): -10.0, -11.5, -13.3, -14.4, -14.2, -13.0, -13.2, -14.0, -13.5, -10.0, -8.8, -7.8
- Nominal GDP (billions of Rwanda francs, FY basis series shown): 2,565, 2,964, 3,257, 3,709, 3,801, 4,300, 4,409, 5,109, 5,828, 6,567, 7,412, 8,325

### Monetary aggregates and central bank operations (selected)
- Broad money (M2) annual growth (selected series): 24.2, 13.1, 16.9, 19.6, 26.8, 17.0, 17.0, 16.9, 15.6, 13.7, 13.9, 13.3
- Reserve money (end-period levels in Table 4, selected): 116.4, 130.9, 130.6, 144.8, 150.7, 150.7, 156.6, 161.6, 168.5, 177.3, 181.9, 183.2
- Net foreign assets of monetary authorities (selected levels): 358.0, 414.9, 353.5, 377.6, 424.1, 424.1, 460.2, 563.9, 491.8, 445.5, 539.9, 396.3
- Broad money (levels, Dec 2008–2013 excerpt): 527.1, 615.9, 626.5, 712.7, 731.7, 721.8, 736.4, 780.7, 828.1, 851.4, 908.3, 861.8, 913.4, 968.4, 995.5, 1,061.6, 1,067.5
- Currency/broad money ratio (selected): 14.6, 14.7, 13.4, 14.2, 13.1, 12.9, 13.8, 13.2, 13.1, 13.3, 12.7, 13.5

### Balance of payments and financing (selected)
- Financial account (Millions of U.S. Dollars, 2008–2017): 106.1, 327.5, 246.3, 547.9, 511.2, 540.2, 480.4, 413.8, 593.8, 425.1, 328.6, 410.9
- Direct investment (Millions of U.S. Dollars, 2008–2017): 103.4, 118.7, 42.3, 60.0, 106.2, 150.0, 171.9, 120.8, 150.0, 180.3, 207.5, 237.5
- Public sector capital (Millions of U.S. Dollars, 2008–2017): 104.8, 182.1, 99.0, 419.3, 309.6, 279.4, 188.6, 318.0, 320.4, 14.8, 40.3, 99.5
- Scheduled debt service ratio (Percent of exports of goods and services, selected): 2.1, 2.1, 2.2, 5.6, 4.2, 5.7, 13.0, 13.1, 9.6, 8.7, 9.4, 9.5
- Net present value of external debt (Percent of exports of goods and services, selected): 86.9, 100.5, 88.9, 118.9, 111.2, 114.8, 117.0, 121.0, 109.4, 96.7

### Financial soundness of banking sector (selected indicators, 2006–2011)
- Regulatory capital to risk-weighted assets (Dec 2006–Dec 2011 snapshots): 14.0, 17.8, 15.9, 19.1, 19.0, 18.4, 17.6, 20.3, 21.6, 21.9, 23.8
- NPLs/gross loans (selected): 23.4, 16.9, 12.6, 13.8, 13.1, 12.5, 12.2, 12.4, 11.3, 10.2, 8.2
- Provisions/NPLs (selected): 89.0, 88.6, 66.3, 67.6, 55.2, 57.2, 56.8, 57.0, 53.1, 50.5, 49.0
- Return on average assets (selected): 2.3, 1.4, 2.5, 1.6, 0.7, -0.2, 1.3, 1.6, 1.9, 2.5, 2.5
- Return on average equity (selected): 25.8, 13.6, 20.9, 11.4, 5.0, -1.4, 10.3, 12.2, 13.7, 17.2, 14.3
- Net interest margin (selected): 7.3, 7.3, 10.2, 10.3, 9.1, 9.6, 8.8, 8.8, 8.7, 8.6, 12.6
- Liquid assets/total deposits (selected): 62.4, 68.9, 61.1, 65.4, 61.7, 65.3, 51.7, 58.4, 47.9, 57.8, 46.3

*Sources: Rwandan authorities and IMF staff estimates and projections.*

### Appendix Table 1. DSA Update: Key Variables

### _cr12152 - Appendix Table 1. DSA Update: Key Variables

### Macroeconomic aggregates
- Nominal GDP (RF billions): 2,964; 3,257; 3,801; 4,409; 5,109; 5,828; 6,567; 7,412; 8,325; 14,558; 25,456; 44,514
- Real GDP (percentage change): 4.1; 7.2; 8.6; 7.7; 7.5; 7.2; 7.0; 7.0; 6.5; 6.5; 6.5; 6.5
- GDP deflator (percentage change): 11.0; 2.5; 7.5; 7.7; 7.8; 6.4; 5.3; 5.5; 5.5; 5.0; 5.0; 5.0

### Fiscal (central government)
- External grants (incl. HIPC relief) (Percent of GDP): 11.7; 13.6; 11.6; 12.0; 10.2; 8.2; 8.1; 7.0; 6.2; 4.4; 4.0; 3.9
- Revenue (excl. external grants) (Percent of GDP): 12.8; 13.2; 14.2; 13.9; 14.2; 14.5; 14.7; 14.9; 15.2; 15.8; 16.5; 16.8
- Revenue (incl. external grants) (Percent of GDP): 24.6; 26.8; 25.8; 25.9; 24.4; 22.7; 22.7; 21.9; 21.4; 20.2; 20.5; 20.7
- Primary expenditures (Percent of GDP): 25.1; 26.8; 25.5; 28.9; 27.6; 25.8; 23.8; 22.9; 22.2; 22.4; 22.4; 22.4
- Primary current expenditures (Percent of GDP): 13.9; 15.0; 14.2; 14.1; 14.0; 13.8; 14.0; 13.7; 13.6; 13.9; 13.9; 13.9
- Capital expenditure and net lending (Percent of GDP): 11.1; 11.8; 11.3; 14.8; 13.6; 12.0; 9.8; 9.1; 8.6; 8.6; 8.6; 8.6
- Primary balance, incl. external grants (Percent of GDP): -0.5; 0.0; 0.3; -3.0; -3.2; -3.1; -1.0; -0.9; -0.8; -2.2; -2.0; -1.8
- Primary balance, excl. external grants (Percent of GDP): -12.2; -13.6; -11.3; -15.0; -13.4; -11.3; -9.1; -7.9; -7.0; -6.6; -6.0; -5.6
- Net domestic financing (Percent of GDP): -0.8; 0.1; -1.9; 1.3; 0.6; 0.0; 0.0; 0.0; 0.3; 0.3; 0.3; 0.3
- Interest rate (percent): 8.0 (each year shown)

- New external borrowing (Percent of GDP, includes publicly guaranteed external borrowing): 0.0; 3.3; 3.1; 2.6; 2.7; 1.4; 0.9; 1.5; 2.8; 2.7; 2.6
- Grant element of new external borrowing (percent): 18.3; 15.1; 3.4; 14.9; 37.4; 35.6; 34.7; 33.9; 31.3; 29.7

### Balance of payments and external sector (Percent of GDP unless otherwise indicated)
- Exports of goods and services: 11.0; 10.9; 14.1; 12.9; 12.6; 12.5; 12.4; 12.6; 12.9; 14.7; 16.4; 18.2
- Imports of goods and services: 29.2; 29.4; 34.5; 35.4; 32.2; 30.8; 26.3; 25.2; 24.7; 24.4; 24.2; 23.9
- Current account, incl. official transfers: -7.3; -5.9; -7.3; -10.0; -9.7; -10.4; -7.2; -6.3; -5.9; -5.2; -3.2; -0.9
- Foreign Direct Investment (Percent of GDP): 2.3; 0.8; 1.7; 2.5; 1.6; 1.8; 1.9; 2.0; 2.1; 2.4; 2.4; 2.4
- Gross official reserves (months of imports of G&S): 5.4; 4.5; 5.1; 5.0; 4.4; 4.4; 4.4; 4.0; 3.8; 3.8; 3.8; 3.8

### Cross-references within DSA appendices (selected comparative metrics)
- Stock of public and publicly-guaranteed (PPG) external debt (Millions of U.S. dollars): 1,221; 1,326; 1,345; 1,287; 1,443; 1,588
- Stock of PPG external debt (Percent of GDP): 19.2; 19.0; 17.7; 18.7; 19.1; 19.1
- Present value (PV) of PPG external debt (Millions of U.S. dollars): 880; 986; 993; 990; 1,088; 1,223
- PV of PPG external debt (Percent of GDP): 13.8; 14.2; 13.1; 14.4; 14.4; 14.7
- PV of PPG external debt to revenues (percent): 97.8; 97.7; 88.7; 103.2; 102.0; 101.5
- PV of PPG external debt to exports (percent): 108.7; 110.7; 100.3; 111.2; 114.8; 117.0
- PPG external debt service to revenues (percent): 4.5; 5.4; 6.6; 12.0; 11.6; 8.4
- PPG external debt service to exports (percent): 5.0; 6.1; 7.5; 13.0; 13.1; 9.6

### External DSA baseline indicators and dynamics (selected)
- External debt (nominal, Percent of GDP): 14.5; 17.7; 21.6; 23.5; 23.7; 23.1; 22.8; 21.1; 19.2; 18.1; 19.1; 23.8
- Change in external debt (Percent of GDP): -0.3; 3.2; 3.9; 1.9; 0.3; -0.6; -0.3; -1.7; -1.9; -1.1; 0.6; 0.3
- Identified net debt-creating flows (Percent of GDP): 3.6; 4.2; 3.6; 6.0; 6.6; 7.1; 3.8; 2.8; 2.5; 3.1; 1.7; -2.9
- Non-interest current account deficit (Percent of GDP): 7.2; 5.8; 7.1; 2.9; 3.5; 9.5; 8.7; 9.7; 6.6; 5.7; 5.4; 6.0
- Endogenous debt dynamics (contribution, Percent of GDP): -1.3; -0.8; -1.9; -1.0; -0.6; -0.8; -0.9; -0.8; -0.7; -0.7; -0.7; -0.9
  - Contribution from nominal interest rate: 0.1; 0.2; 0.2; 0.5; 1.0; 0.8; 0.6; 0.6; 0.6; 0.5; 0.4; 0.5
  - Contribution from real GDP growth: -0.5; -1.0; -1.3; -1.5; -1.6; -1.6; -1.5; -1.5; -1.3; -1.1; -1.1; -1.4
  - Contribution from price and exchange rate changes: -0.9; 0.0; -0.7; ...
- Residual (3-4) (Percent of GDP): -3.9; -1.0; 0.4; -4.2; -6.4; -7.7; -4.1; -4.5; -4.4; -4.2; -1.1; 3.2

- PV of PPG external debt (Percent of GDP, selected entries): 19.0; 16.1; 19.1; 19.0; 18.7; 18.5; 16.8; 15.0; 13.9; 13.6; 17.3
- PV of PPG external debt (Percent of exports, selected entries): 114.3; 148.1; 151.3; 149.2; 149.2; 133.1; 116.6; 105.1; 92.5; 95.4
- PPG debt service-to-exports ratio (Percent): 2.1; 2.6; 6.5; 16.2; 16.9; 13.6; 13.0; 13.7; 13.8; 13.0; 11.7; 16.6
- Total gross financing need (Billions of U.S. dollars): 0.3; 0.3; 0.4; 0.7; 0.7; 0.8; 0.6; 0.6; 0.6; 0.7; 0.8; 1.1
- Non-interest current account deficit that stabilizes debt ratio (Percent of GDP): 7.5; 2.6; 3.2; 7.6; 8.5; 10.3; 6.9; 7.4; 7.3; 7.1; 4.3; 0.2

### Key macroeconomic assumptions used in DSA (selected)
- Real GDP growth (Percent): 4.1; 7.2; 8.6; 7.8; 3.3; 7.7; 7.5; 7.2; 7.0; 7.0; 6.5; 6.5; 7.1; 6.5; 6.5; 6.5
- GDP deflator in U.S. dollar terms (change, percent): 6.7; -0.1; 4.4; 6.3; 7.7; 2.1; 3.6; 1.8; 2.1; 2.4; 2.4; 2.0; 2.4; 2.0; 2.0; 2.0
- Effective interest rate (percent): 1.1; 1.4; 1.3; 1.1; 0.2; 2.5; 4.9; 3.5; 2.8; 3.0; 2.9; 2.7; 3.3; 2.1; 2.3; 2.2
- Growth of exports of G&S (U.S. dollar terms, percent): -16.2; 5.5; 47.0; 18.7; 25.8; 0.7; 8.3; 8.9; 8.0; 11.7; 11.4; 11.6; 8.2; 11.3; 10.8; 11.1
- Growth of imports of G&S (U.S. dollar terms, percent): 8.6; 7.8; 33.0; 18.9; 14.7; 12.9; 1.5; 4.1; -6.5; 5.0; 6.7; 8.4; 3.9; 8.4; 8.4; 8.4
- Government revenues (excluding grants, Percent of GDP): 12.8; 13.2; 14.2; 13.9; 14.2; 14.5; 14.7; 14.9; 15.2; 15.3; 15.8; 16.8; 16.2

### Aid and grant-equivalent financing
- Aid flows (Billions of U.S. dollars): 0.7; 0.8; 0.8; 0.9; 0.8; 0.8; 0.8; 0.8; 0.8; 0.8; 1.0; 1.5
  - Of which: Grants (Billions of U.S. dollars): 0.6; 0.8; 0.7; 0.8; 0.8; 0.7; 0.7; 0.7; 0.7; 0.7; 0.7; 1.5
  - Of which: Concessional loans (Billions of U.S. dollars): 0.1; 0.1; 0.1; 0.1; 0.0; 0.1; 0.1; 0.1; 0.1; 0.2; 0.3; 0.0
- Grant-equivalent financing (Percent of GDP, selected): 12.4; 10.3; 8.6; 8.5; 7.3; 6.6; 6.3; 5.4; 4.6; 5.2
- Grant-equivalent financing (Percent of external financing, selected): 82.3; 80.5; 78.9; 90.9; 92.6; 87.1; 82.1; 74.2; 71.4; 73.9

### Sensitivity and stress-test highlights (from Appendix Tables 3–5, selected)
- Alternative scenarios and bound tests show sensitivity of PV of debt-to-exports, PV of debt-to-revenue, and PV of debt-to-GDP ratios to shocks such as:
  - Historical-average shocks, less favorable loan terms, lower real GDP growth (historical average minus one standard deviation), lower export growth, lower US dollar GDP deflator, lower net non-debt creating flows, and a one-time 30 percent nominal depreciation relative to baseline in 2013.
- Representative stress outcomes (selected labels shown in tables):
  - Baseline and scenario indicators for PV of debt-to-exports ratio, PV of debt-to-revenue ratio, PV of debt-to-GDP ratio, debt service-to-exports ratio, and debt service-to-revenue ratio are presented across 2009–2032 with scenario-specific numeric outcomes in the tabulated appendices.

### Public sector debt (baseline, selected entries)
- Public sector debt (Percent of GDP): 23.0; 23.4; 25.9; 25.2; 24.9; 23.6; 22.4; 20.9; 19.4; 20.0; 20.5; 21.1; 21.7; 22.2; 22.7; 23.0; 23.2; 23.4; 23.5; 23.6
- Of which foreign-currency denominated (Percent of GDP): 14.5; 14.6; 18.0; 18.7; 19.1; 19.1; 19.3; 18.1; 16.6; 17.4; 18.0; 18.6; 19.2; 19.7; 20.2; 20.5; 20.8; 21.0; 21.0; 21.1
- PV of public sector debt (Percent of GDP, selected): 24.7; 20.4; 20.8; 20.2; 19.2; 18.2; 16.6; 19.2; 14.5; 14.8; 15.1; 15.5; 15.9; 16.2; 16.5; 16.7; 16.8; 16.9; 17.0
- Gross financing need (Percent of GDP, selected): -0.1; 1.1; 3.5; 4.2; 8.2; 7.2; 6.5; 4.3; 3.4; 4.9; 4.9; 4.9
- Debt service-to-revenue and grants ratio (Percent): 2.5; 2.2; 2.4; 3.4; 7.1; 7.3; 6.0; 5.5; 6.2; 5.2; 5.1; 4.9; 4.8; 4.7; 4.8; 5.0; 5.1; 5.2; 5.4; 5.5

_Source: Country authorities, IMF, and World Bank._

### Appendix Table 6. Rwanda: Sensitivity Analysis for Key Indicators of Public Debt, 2012–32

### Appendix Table 6. Rwanda: Sensitivity Analysis for Key Indicators of Public Debt, 2012–32

### A. Alternative scenarios — tabulated scenario outcomes (selected series as presented)
- Baseline series (selected display): 2012 2013 2014 2015 2016 2017 2022 2032
  - Baseline: 20 21 20 19 18 17 14 17
- A1. Real GDP growth and primary balance are at historical averages: 19 17 14 13 12 10 5 3
- A2. Primary balance is unchanged from 2011: 18 16 13 11 9 7 0 -6
- A3. Permanently lower GDP growth1: 21 21 20 19 18 17 20 36

### B. Bound tests — tabulated stress-test outcomes (selected series as presented)
- B1. Real GDP growth is at historical average minus one standard deviations in 2012–2013: 22 22 22 22 21 20 20 21 28
- B2. Primary balance is at historical average minus one standard deviations in 2012–2013: 20 19 18 17 15 14 14 17
- B3. Combination of B1-B2 using one half standard deviation shocks: 20 18 18 17 16 15 16 22
- B4. One-time 30 percent real depreciation in 2012: 27 25 24 23 21 19 17 19
- B5. 10 percent of GDP increase in other debt-creating flows in 2012: 29 28 26 25 23 21 19 20

### Key projected indicators (table headings and sample baseline values as presented)
- PV of Debt-to-GDP Ratio (Percent) — Baseline (selected): 79 86 89 85 83 78 71 82
- PV of Debt-to-Revenue Ratio2 — Baseline (selected): 73 69 64 59 54 49 27 14
- Debt Service-to-Revenue Ratio2 — Baseline (selected): 77 65 67 55

Notes on scenario panels and most extreme shocks (figure captions)
- Appendix Figure 1 notes:
  - "The most extreme stress test is the test that yields the highest ratio in 2017. In figure b. it corresponds to public sector borrowing on less favorable terms; in c. to a Exports shock; in d. to a future public sector borrowing on less favorable terms; in e. to a Exports shock and in figure f. to a One-time depreciation shock."
- Appendix Figure 1 panels and sample plotted series:
  - a. Debt Accumulation — series include Rate of Debt Accumulation, Grant-equivalent financing (% of GDP), Grant element of new borrowing (% right scale)
  - b. PV of debt-to-GDP ratio
  - c. PV of debt-to-exports ratio
  - d. PV of debt-to-revenue ratio
  - e. Debt service-to-exports ratio
  - f. Debt service-to-revenue ratio
- Time horizon shown in figures: 2012, 2017, 2022, 2027, 2032.

Appendix Figure 2 highlights alternative scenario outcomes (2012–32)
- Caption notes:
  - "The most extreme stress test is the test that yields the highest ratio in 2022. In the top panel, this corresponds to permanent lower growth (A3); in the middle panel to a 1-standard deviation growth shock in 2012 (B1); and in the bottom panel to a one-time 30 percent real depreciation in 2012 (B4)."
- PV of Debt-to-Revenue Ratio2, PV of Debt-to-GDP Ratio, and Debt Service-to-Revenue Ratio2 are plotted for Baseline, Fix Primary Balance, Most extreme shock, Historical scenario across 2012–2032.

Additional notes and definitions included in the appendix
- Sources: Country authorities and IMF staff estimates and projections.
- Footnote 1: "Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period."
- Footnote 2: "Revenues are defined inclusive of grants."

*Sources: Appendix Table 6 and accompanying figures and notes from the IMF staff projections and country authorities as presented in the PDF.*

### 16. Broad money supply recorded an annual increase of 26.8 percent at end-2011, driven

### _cr12152 - 16. Broad money supply recorded an annual increase of 26.8 percent at end-2011, driven

### Monetary developments
- Broad money supply recorded an annual increase of 26.8 percent at end-2011, driven mainly by the growth of credit to the private sector (27.9 percent).
- Increase in monetary aggregates has been in line with nominal GDP growth of 16.7 percent and the monetization of the economy.
- Following upward targets review in November 2011, the National Bank of Rwanda (NBR) achieved end December 2011 net foreign assets and reserve money targets.
- Monetary programme remained on track in Q1 2012 due to improved money demand projection.
- In line with the PSI structural benchmark of end February 2012, the NBR developed a liquidity forecasting framework with horizon extended from 1 week to 6 months; implemented since 1st March 2012, it integrates forecasted changes in autonomous factors with focus on Government operations, currency in circulation and cash in vault held by banks.
- To support interbank market development, NBR adopted an action plan and on February 29 fixed REPO and reverse REPO operations to a maturity of seven days.
  - Key REPO Rate used as the maximum rate for mopping up liquidity and the minimum rate for injecting liquidity for seven-day maturity operations.
  - Other maturities may be used in exceptional cases for fine-tuning.

- Money market interest rates increased from 7% in June to 8.1% in December, reflecting changes in banking system liquidity and central bank policy/ reserve money targets.
- Central bank policy rate increases: from 6.0 percent to 6.5 percent in October and to 7.0 percent in November.
- Inflation: 8.3 percent in December 2011 and 8.2 percent in March 2012 (one-digit level, contrasted with double-digit inflation in other EAC members).

### Financial sector performance and supervision
- Banking system remained highly liquid and profitable.
- Nonperforming loans ratio declined from 11.3% at end-2010 to 8.2% at end-2011.
- NBR actions:
  - Hired 60 inspectors to supervise Savings and Credit Cooperative Organizations (SACCOs) at district level; inspectors trained and equipped.
  - At end March 2012, all 416 SACCOs authorized to grant loans: 273 fully licensed (up to 40% of their deposit) and the remaining (up to 20%) of their deposits.
  - All SACCOs received a computer and a printer from Rwanda Cooperative Agency (RCA).
- Regulatory measures:
  - NBR Board approved two banking regulations in December 2011: Reporting requirements and Risk Management.
- Financial Sector Development Plan (FSDP) actions:
  - NBR received World Bank TA to elaborate an action plan to implement all recommendations of 2011 FSAP update.
  - Scoping mission conducted March 5–30, 2012; team expected to return in June 2012; FSDP report expected finalized by September 2012.
- Market developments and access:
  - One new regional bank (Equity Bank) started operations in Q3 2011.
  - Three MFIs upgraded to Microfinance Banks.
  - Three banks licensed to offer agent banking; almost all banks provide mobile banking.
  - Number of bank branches/outlet networks: 448 in 2011 vs. 333 in 2010.
- Supervision capacity:
  - Recruited 5 new inspectors; Bank Supervision Department comprises 18 Inspectors.
  - Inspectors start one step ahead other staff to improve compensation/professional development.
  - Onsite inspections: nine in 2011 vs. seven in 2010.

### Poverty reduction and agricultural indicators
- Third integrated household living conditions survey sample size: 14,310 households (permits district-level estimates).
- Poverty changes between 2005/06 and 2010/11:
  - National poverty estimated at 44.9 percent in 2010/11.
  - Urban poverty: 22.1 percent; Rural poverty: 48.8 percent.
  - Reduction in poverty at national level by 12 percentage points between 2005/06 and 2010/11.
  - Extreme poor: 40% in 2000/01; 36% in 2005/06; 24% in 2010/11.
- Agricultural indicators:
  - Share of marketed output (livestock and crops) increased from 22% to 27% between 2005/06 and 2010/11.
  - Ownership of livestock increased from 34% to 47% nationally from 2005/06 to 2010/11.

### Statistical issues and capacity building
- NISR plans Integrated Enterprise Survey (IES) for reference year 2011 to compile Supply and Use Table (SUT) and provide GDP rebasing benchmarks.
  - 2011 IES to collect benchmark data on non-agriculture non-household sector using 2011 Establishment Census; data collection expected from May 2012; results expected by end December 2012.
- NISR staffing: recruited 47 new staff including economists; Economic Statistics Department strengthened with a director and four Principal Statisticians (national accounts, trade and services, prices, agricultural/industrial statistics).
- Agricultural statistics progress:
  - Key consultants recruited; first mission by two senior advisers of Agricultural Assessments International Corporation (AAIC) in February; prepared assessment and recommendations paper published end-March 2012 (structural benchmark).
- NISR to hire international experts via NISR Basket fund to support national accounts improvements and balance of payments, government financial statistics, SUT for 2011, and broader capacity building.

### Objectives and policies looking forward (2012/13 and medium term)
- Macroeconomic outlook:
  - 2012 domestic output growth projected at 7.7 percent (led by agriculture, construction and services), reflecting lower growth on account of looming global recession risks.
  - Inflation targets: 7.5 percent for end-2012; 6.5 percent for end-2013; stabilize at 5 percent over the medium-term.
- Fiscal consolidation focus: increased domestic revenue mobilization and expenditure prioritization to close fiscal gap.
  - Domestic revenue projections:
    - 13.8 percent of GDP in 2011/12 rising to 14 percent of GDP in 2012/2013 and 14.3 percent of GDP in 2013/2014.
    - Over the medium term domestic revenue expected to rise on average by 0.3 percent of GDP per annum and reach 14.9 percent of GDP by 2015/2016.
  - Total outlays projected:
    - Rise to 28 percent of GDP in 2012/2013 to accommodate wage increases and domestically financed capital budget.
    - Decline steadily to 23.7 percent of GDP by 2015/2016.
  - Overall deficit (including grants) projected to decline from 2.6 percent of GDP in 2012/2013 to 1.6 percent of GDP in 2015/2016.

### Fiscal policy for 2012/13 (budget priorities and composition)
- Main objectives: increase revenue mobilization; allocate resources for Pay and Retention policy wage increases and domestically financed capital projects to reduce poverty.
- Pay and Retention policy: intended to attract, retain and motivate personnel; medium-term limits to ensure macroeconomic stability.
- Expenditure adjustments:
  - Reductions in allocations for purchase of non-priority goods and services to partially finance wage and capital increases.
  - Allocations for purchase of goods and services to be augmented on average by 0.2 percent per annum in the medium term with equal savings from domestically financed expenditures.
- Projections and allocations:
  - Total domestic revenue collections for FY 2012/2013 projected at 14 percent of GDP.
    - Tax revenue: 13.5 percent of GDP.
    - Non-tax revenue: 0.5 percent of GDP (not expected to rise over medium term due to permanent loss of dividends from privatization).
  - Total expenditure and net lending estimated at 28 percent of GDP (up from 26.9 percent in FY 2011/12).
    - Domestic capital spending to reduce poverty: 4.9 percent of GDP.
    - Wage bill rising from 4.2 percent of GDP to 4.9 percent of GDP.
      - Largest share (0.5 percent of GDP) to increase minimum wages of lowest paid workers (particularly teachers) and reduce relativities.
      - Remaining share (0.2 percent of GDP) for late promotions and new recruitments.
  - Net domestic financing: budget closes with net domestic finance equivalent to 0.3 percent of GDP.
  - Donor commitments and medium-term uncertainty:
    - Total budgetary grants for 2012/2013 projected at 11.4 percent of GDP due to broader coverage of project grants.
    - Grants projected to decline to 7.2 percent of GDP by 2015/16 as Rwanda moves to mixed eligibility for budget loans.
    - Budgetary loans expected to rise from 0.2 percent of GDP in 2012/2013 to 2.8 percent of GDP by 2014/2015 to partly offset grant shortfall.
- Risks: shortfalls in revenue and grants could prompt government to delay non-priority spending to avoid additional domestic borrowing.

### Revenue administration and tax policy measures for 2012/13
- Revenue administration measures from paragraph 6 remain ongoing into 2012/13 except the customer satisfaction survey which was completed.
- No additional tax policy changes envisioned for 2012/13 beyond measures listed:
  1. Increase in tax rates, starting July 2012, for imported construction materials by 5 percent on average on import duties, VAT and excise duties. (Rwf 1 billion)
  2. Revision of the investment code, by June 2012 (structural benchmark) — yielding revenue of 0.1 percent of GDP.
  3. Introduce Gaming tax (Rwf 1 billion).
  4. Introduce Electronic Sales Register (ERS) to limit VAT evasion and track potential taxpayers yielding revenue of 0.2 percent of GDP.
  - PAYE from increase in salaries of civil and public servants will yield 0.2 percent of GDP.

- SME tax regime changes (revenue neutral):
  - SMEs with turnover RWF 12 million to RWF 50 million: tax rate 3 percent instead of 4 percent per annum.
  - Micro enterprises with turnover RWF 2 million to RWF 12 million grouped in four bands with flat tax amounts ranging from RWF 60,000 to RWF 300,000 per annum.

- Transparency: Quarterly budget execution reports to be prepared and published on the website within 45 days from the end of each quarter (continuous structural benchmark).

### Public Financial Management (PFM) priorities and reforms
- PFM reform agenda objectives: address disconnect between planning and budgeting, automate PFM operations, build professional capacity across PFM functional areas, and build capacity at decentralized level.
- Priority measures for 2012/13:
  i. Complete design of detailed system and technical requirements of Integrated Financial Management Information System (IFMIS) including functional, technical requirement documents and quality review by end December 2012 (structural benchmark).
  ii. Elaborate EDPRS II 2013-2018 and pertinent sector and district strategic plans (EDPRS I ends 30th June 2013).
  iii. Review program structure of the budget and revamp Medium Term Expenditure Framework (MTEF).
  iv. Support implementation of the Fiscal Decentralization Strategy (FDS).
  v. Continue phase two of Electronic Tax Registers implementation to efficiently collect VAT and expand tax base.
  vi. Finalize updated law on state finances and property with IMF East Afritac support; law expected finalized in next fiscal year.
  vii. Support Institute of Certified Public Accountants of Rwanda (ICPAR) to launch CPA-Rwanda qualification to build certified accountant cadre.
  - Stabilize current IFMIS while laying ground for future IFMIS; IFMIS Road map developed; roadmap implementation concurrent with stabilization to deepen coverage and reduce support needs.
  viii. Strengthen public procurement professional capacity via School of Finance and Banking (SFB) with ITC-ILO twinning; first phase completed and second phase ongoing.
  ix. Build professional internal audit cadre and automate internal audit processes using electronic working papers software to increase efficiency.
  x. Prepare second generation PFM Reform Strategy and financing mechanism as current strategy expires 30th June 2013.

*Source: IMF staff report content as provided in the supplied document excerpt.*

### 42. With regards to domestic borrowing to finance the budget in the medium term,

### _cr12152 - 42. With regards to domestic borrowing to finance the budget in the medium term,

### Domestic borrowing and debt strategy
- Government intends to limit the size of domestic borrowing to a level that "leaves ample scope for the expansion of credit to the private sector in the context of maintaining macroeconomic stability."
- Plan to revise the Medium-Term Debt Management Strategy (MTDS) to reflect debt portfolio preferences over the medium term; revised strategy to be submitted for cabinet consideration in May 2012 along the FY 2012/13 Budget Framework Paper.
- Annual updates of the MTDS are expected to incorporate new debt developments and any shift in debt portfolio preference depending on prevailing conditions.

### External borrowing, concessionality, and ceilings
- Authorities broadened MTDS scope to include public corporations borrowing (previously only central government).
- Commitment to explore all avenues for concessional financing; some non-concessional financing will be necessary due to large resource requirements for development agenda.
- Ceiling agreed during the PSI period: US$240 million of non-concessional borrowing for RwandAir and the Kigali Conference Center (KCC).
- Request to raise current ceiling to $255 million and untie it from the two previously identified projects to accommodate non-concessional borrowing of up to US$15 million by the Rwandan Development Bank (BRD).
- Financing plans and options being finalized for strategic investment projects (energy, international airport, regional railway); a review of current ceilings will be requested in context of the fifth PSI review.

### External sector outlook and projections
- 2012 short-run outlook:
  - Exports: value projected to increase only by 1 percent in 2012 despite significant increase in export volumes (coffee, tea and minerals).
  - Imports: projected to rise in value terms by 14 percent in 2012 (responding to investment needs and expected increase in oil prices).
  - Current transfers (Global Fund) projected to increase, but current account balance expected to worsen slightly in 2012.
  - Net capital flows (public and private borrowings) expected to allow a small overall balance of payments deficit.
  - Gross reserves at end-2012 projected at a level of 4.7 months of imports (excluding the encumbered assets).
- Medium term projections:
  - Exports (value terms): projected to increase on average by 5 percent per annum reflecting implementation of the National Export Strategy.
  - Imports (value terms): projected to rise on average by 20 percent per annum responding to investment requirements.
  - Current account: expected to deteriorate slightly mirroring projected decline in budgetary grants.
  - Public and private capital flows: projected to increase to partly offset decline in grants and respond to expected rise in FDIs for private sector projects.
  - Balance of payments: projected deficits in 2013 and 2014 resulting in draw down of reserves; official reserves expected to remain at comfortable levels covering 4 to 5 months of imports of goods and services.

### Debt capacity building and DSA
- Plan to conduct first full Debt Sustainability Analysis (DSA) in July 2012; training to do so in June 2012 in Tunis.
- Macroeconomic Policy unit at MINECOFIN to coordinate DSA work, set up the macroeconomic framework, and prepare debt data to integrate the DSA with internally consistent macroeconomic projections.

### National Exports Strategy (NES) implementation and financing
- Rwanda Development Board (RDB) produces semi-annual implementation reports of the NES action plan to IDEC; first report ready by July 2012 to review NES performance against agreed targets.
- Financing challenges: not all NES activities have allocated budgetary resources.
- RDB preparing a NES financing strategy concept note to submit to IDEC for approval by June 2012 to determine financing gap/needs and recommend strategies to close the gap.
- Full NES financing strategy to be developed following stakeholder consultations and submitted to IDEC by December 2012 (structural benchmark).

### Monetary policy and exchange rate framework
- NBR aims to tighten monetary policy in 2012.
- Inflation targets:
  - 2012 (end period): 7.5 percent
  - 2013: 6.5 percent
  - 2014: 5.5 percent
  - Medium term: return to 5 percent
- Money and credit projections (2012):
  - Broad money growth projected to slow to 17 percent in 2012 (from 26.8 percent in 2011).
  - Reserve Money growth projected to slow to 17 percent in 2012 (from 23.4 percent in 2011).
  - Credit to the private sector growth projected at 18.4 percent in 2012 (from 27.9 percent in 2011).
- Risks: potential higher inflation from exogenous shocks including food and fuel prices; NBR committed to tighten policy as needed.
- Exchange rate policy: market driven; NBR will intervene only to smooth exchange rate volatility.
- Institutional and market developments:
  - NBR building a small macro-economic model in partnership with International Growth Centre for monetary policy analysis and forecasting.
  - Reforms to inter-bank market and reserve requirement system to shorten lag between base and maintenance period, extend maintenance period to at least two weeks, and allow banks to use averaging provision; reforms to be completed before end-June 2012.
  - Commercial banks started submitting monthly financial statements within 10 days of month end.
  - By end-June 2012, NBR to introduce a fully collateralised standing short term lending facility (separate from discount facility) with interest rate set at a margin above the Key REPO Rate.
  - NBR to consult MINECOFIN by September 2012 on a plan to convert existing NBR consolidated claims on government into marketable securities to deepen domestic money market.

### Financial sector reforms and SACCO consolidation
- SACCO supervision structure developed and approved by High Level Steering Committee in March 2012; action plan drafted and approved in March 2012.
- Retained model: Cooperative Bank resulting from a consolidation process carried out in two phases:
  - Phase I: Formation of district SACCOs by end 2013; district SACCO formed at each district, comprising all current SACCOs in a Sector. HLSC in place to approve action plan and monitor implementation.
  - Phase II: Unify district SACCOs at national level to form a Cooperative Bank; expert to be hired to study Business Model, ownership and interface options; cooperative bank to be established by 2014.
- Supervisory staffing:
  - Phase I: maintain all 60 inspectors at district level.
  - Phase II: consultant on Business Model will determine adequate number of inspectors.
- NBR plans a harmonized credit policy for SACCOs by end-September 2012; exercise to rate SACCOs to determine those qualifying for consolidation at district level by end-December 2012 (structural benchmark).

### Statistics and rebasing initiatives
- NISR improving economic statistics and national accounts per improvement action plan.
- Recruitment of key consultants in Agriculture statistics completed; consultants undertook initial two-week mission to assess current situation and review agricultural statistics and sampling methodology.
- April–October 2012: experts to help NISR prepare agriculture survey using new methodology and train supervisors, controllers and enumerators.
- Establishment Census 2011 used to select a sample of 950 establishments for planned 2011 Business Survey and Non Profit Institutions Survey to be completed by end-October 2012 (structural benchmark).
- Data from benchmark surveys to be used to develop detailed input-output (I-O) and supply-use tables (SUT) and to rebase GDP estimates in 2011 constant prices.
- CPI rebasing: With IMF EastAFRITAC help, NISR will rebase CPI statistics using EICV3 results by end of June 2013.
- GDP rebasing: rebasing of GDP estimates using 2011 constant prices expected to be finished by end of December 2013.

### Quantitative assessment highlights (selected exact figures from Table 1)
- Gross reserves at end-2012 projection: 4.7 months of imports (excluding encumbered assets).
- Non-concessional government guaranteed external debt ceilings (US$ Millions):
  - Agreed ceiling during PSI: 240.0
  - Requested ceiling increase: 255.0
  - Historical and projected periodic entries in table include repeated 240.0 and 255.0 figures across test dates.
- Reserve money and other program numbers are reported in Table 1 (Billions of Rwandan francs), including specific stock and flow targets (see source table for full schedule).
- Indicative targets and assessment criteria include exact figures for domestic revenue collection, consolidated domestic debt of public sector, and other indicators as detailed in the program tables.

### Status of structural benchmarks and policy measures (selected)
- Revised public debt policy and MTDS: Not met by End-October 2011; ongoing with revised completion expected at end-June 2012.
- Pilot integration of donor project accounts into TSA: Met (End-December 2011).
- Blueprint for IFMIS future development: Met (End-December 2011).
- Road map for IFMIS full set of fiscal accounts: Met (End-March 2012).
- MINECOFIN quarterly budget execution reports: Met with delay; 2011Q4 report published at end-March 2012.
- MoU to transfer collection/audit of social security contributions to RRA: Met with delay; MoU signed in May 2012 in place of legislation (target End-September 2011).
- Electronic tax registry introduction: Not met due to procurement delay; expected completion by end-May 2012 (target End-January 2012).
- NES financing plan submission to IDEC: Target End-December 2012 (structural benchmark).
- NBR study to assess exchange rate developments and determinants: Target End-September 2012.
- NBR to introduce fully collateralised standing short-term lending facility: Target End-June 2012.
- Harmonized credit policy for SACCOs: Target End-September 2012.

*Source: _cr12152 - 42. With regards to domestic borrowing to finance the budget in the medium term,*

### 6. Complete the rating of SACCOs and selection of those that qualify for consolidation at district level

### 6. Complete the rating of SACCOs and selection of those that qualify for consolidation at district level

### Structural benchmark: Umurenge SACCOs
- End-December 2012.
- Objective: To expedite supervision of the Umurenge SACCOs.
- Source: IMF staff and Rwandan authorities.

### Technical Memorandum of Understanding — scope and assessment framework
- Coverage period: June 30, 2010–June 29, 2013 (supported by the IMF Policy Support Instrument (PSI)).
- The TMU supersedes the TMU issued in Country Report No. 12/15.
- The quantitative program is assessed through assessment criteria (AC) and indicative targets (IT) for the duration of the program.
- AC apply to the following indicators for end-June and end-December 2012 (the test dates); other dates are IT:
  - Floor on stock of net foreign assets (NFA) of the National Bank of Rwanda (NBR);
  - Ceiling on stock of reserve money;
  - Ceiling on flow net domestic financing (NDF) of the central government;
  - Ceiling on contracting or guaranteeing of new nonconcessional external debt by the public sector;
  - Ceiling on stock of external payment arrears of the public sector.
- IT targets apply throughout the program to:
  - Floor on flow domestic revenue collection of the central government;
  - Ceiling on flow net accumulation of domestic arrears of the central government;
  - Ceiling on stock of consolidated domestic debt of the public sector;
  - Floor on flow priority spending.
- Assessment criteria on contracting or guaranteeing of new nonconcessional external debt by the public sector and stock of external payment arrears of the public sector are applicable on a continuous basis for the duration of the program.

### Program exchange rates (end-December 2011 rates applied for 2012 and 2013)
- Rwanda Franc (per US$): 604.1410
- Euro: 1.2866
- British Pound: 1.5371
- Japanese Yen (per US$): 77.7899
- SDR: 1.5348

### Fiscal sector coverage
- Institutional coverage: central government fiscal operation table comprises the treasury and line ministries (referred to as the government unless specified otherwise).

### Ceiling on net domestic financing (NDF) of the government
- Ceilings for June and for December 31, 2012 are cumulatively measured from December 31, 2011. Other dates are indicative targets.
- Definition: NDF = change in the sum of (i) net banking sector credit to the government and (ii) non-bank holdings of the government domestic debt.
- Net banking sector credit to the government:
  - Includes credit to the government from the banking system (as recorded in the monetary survey), including credit to the government, provinces and districts, outstanding consolidated government debt held by the banking system, government debt to the NBR incurred as a result of the 1995 devaluation (Rwf 9 billion), the overdraft to the prewar government (Rwf 2 billion), and overdraft with the NBR.
  - Excludes treasury bills issued for monetary policy purposes by the NBR, the proceeds of which are sterilized in deposits held as other NBR liabilities.
  - Minus total government deposits with the banking system (as recorded in the monetary survey), including the main treasury account, line ministries, the fund for assistance to genocide survivors, the Rwanda Revenue Authority, the electoral commission, the demobilization commission, fonds routier, privatization account, and any other autonomous public enterprises and public agencies over which the government has direct control over their deposits. Excludes government deposits over which the central government does not have any direct control (project accounts, Global Funds money meant for private sector, counterpart funds and fonds publics affectés).
- Non-bank holdings of the government domestic debt: non-bank holdings of treasury bills, bonds (domestic and nonresident), old development bonds (pre-1994 debt), new development bonds (including those used for recapitalization of banks), and other accounts receivables.
- Programming of Global Fund grants: Grants under control of central government are programmed at US$198.2 million for 2012, corresponding to RWF 119.7 billion as shown in the Fiscal table for the central government under capital grants.
  - Quarterly distributions: US$0 (Jan–March 2012), US$86.3 million (Apr–June 2012), US$198.2 million (July–Sep 2012), and US$198.2 million (Oct–Dec 2012).
- Adjusters to the NDF:
  - The ceiling on NDF will be adjusted upward by the amount of any shortfall between actual and programmed budgetary loans and grants, up to a maximum adjustment of US$80 million, evaluated in Rwanda francs at the program exchange rate.
  - The ceiling will be adjusted downward by the amount of any excess of actual over programmed budgetary loans and grants above US$24 million, evaluated in Rwanda francs at the program exchange rate.
  - The ceiling on NDF will be adjusted upward by the amount of expenditure for food imports in the case of a food emergency.
- Reporting requirement: Data on NDF (showing separately treasury bills and government bonds outstanding, other government debt, and central government deposits), each type of debt by debt holder, and its adjusters will be transmitted monthly within five weeks from the end of each month. Deposits of the government with the NBR and with the commercial banks will be separated from deposits of public enterprises and autonomous public agencies the government does not directly control.

### Floor on flow of domestic revenues
- Floors for June 30, 2012 and for December 31, 2012 are cumulatively measured from December 31, 2011. Other dates are indicative targets.
- Definition: Total government revenue (tax and non-tax revenues) per the central government fiscal operation table, excluding external grants and privatization receipts.
- Reporting requirement: Detailed data on domestic revenues transmitted monthly within five weeks of the end of each month.

### Floor on priority expenditure
- Floors for June 30, 2012 and for December 31, 2012 are cumulatively measured from December 31, 2011. Other dates are indicative targets.
- Definition: Priority spending = sum of recurrent expenditures, domestically-financed capital expenditures, and net lending identified as priority in line with the EDPRS. Monitored through the computerized SIBET expenditure management system.
- Reporting requirement: Data on priority expenditure transmitted monthly within five weeks of the end of each month.

### Ceiling on net accumulation of domestic arrears of the government
- A ceiling applies; ceilings for June 30, 2012 and for December 31, 2012 are cumulatively measured from December 31, 2011. Other dates are indicative targets.
- Definition: Net accumulation of arrears = gross accumulation of new domestic arrears (difference between payment orders and actual payments related to payment orders issued) minus gross repayment of any arrears outstanding since the beginning of the year under review (including repayment of float during the review year and the repayment of older arrears).
- Reporting requirement: Data on repayment of domestic arrears and the remaining previous-year stock of arrears transmitted monthly within five weeks of the end of each month.

### Limits on external debt and related definitions
- Ceiling applies to contracting and guaranteeing by the public sector of new nonconcessional borrowing debt with nonresidents; the ceiling is given in Table 1 of the MEFP and applies continuously from end-June 2010 to end-June 2013.
- Exclusions from the ceiling:
  - Swap agreement of US$50 million signed in November 2009 between the NBR, the IFC;
  - US$13.1 million for purchase of two air planes in 2009;
  - Euro 8 million for loan contracted by the BRD from the European Investment Bank in September 2011;
  - Non concessional borrowing by the Bank of Kigali (assumed not to seek or be granted a government guarantee).
- The ceiling applies to private debt for which official guarantees have been extended, including future swaps involving foreign currency loans guaranteed by the public sector.
- Effective from the date the Executive Board completes the fourth review under the PSI, the ceiling is no longer tied to specific projects.
- Definition of the public sector: general government (central government, NBR, local governments which include provinces and districts) and entities in which the government holds a controlling stake—owning more than 50 percent of the shares or the ability to determine general corporate policy. This definition excludes the Bank of Kigali.
- Guarantee of a debt: arises from any explicit legal obligation of the public sector to service a debt in the event of nonpayment by the debtor, or from any implicit legal or contractual obligation of the public sector to finance partially or in full any shortfall incurred by the debtor.
- Definition of concessionality: A debt is concessional if it includes a grant element of at least 35 percent. Grant element = (nominal value − present value (PV)) / nominal value. PV at contracting is calculated by discounting future debt service using currency-specific CIRRs published by OECD. For maturity at least 15 years, use ten-year-average CIRR; for maturity less than 15 years, use six-month average CIRR. Add OECD margins for differing repayment periods: 0.75 percent for repayment periods of less than 15 years, 1 percent for 15 to 19 years, 1.15 percent for 20 to 29 years, and 1.25 percent for 30 years or more.
- Definition of debt for the AC limit: follows point 9 of the Guidelines on Performance Criteria with Respect to External Debt (effective December 1, 2009). Debt includes loans, suppliers' credits, leases, repurchase agreements, official swap arrangements, and arrears, penalties, and judicially awarded damages arising from failure to make payment under a contractual obligation that constitutes debt.

### Limit on stock of external payment arrears
- A continuous assessment criterion applies to the non-accumulation of payment arrears on external debt contracted or guaranteed by the public sector.
- External payment arrears: external debt service obligations (principal and interest) not paid at the time they are due, excluding arrears on obligations subject to rescheduling.

### Consolidated Domestic Debt of the Public Sector (DD)
- For program purposes, DD excludes treasury bills issued by the NBR for monetary policy purposes.
- Ceiling on DD applies to domestic commitments contracted or guaranteed by the public sector, including private debt with official guarantees (implicit or explicit).
- Adjusters:
  - In case of a shortfall in programmed budgetary loans and grants (per paragraph 12), the ceiling on consolidated domestic debt of public sector will be adjusted upward by the same amount as the increase in the ceiling in the NDF, but capped per paragraph 12.
  - The ceiling on the DD will be adjusted upward by the amount of expenditure for food imports in the case of a food emergency.
- Reporting requirement: Data on domestic debt of the public sector, including treasury bills issued by the NBR for monetary policy purposes, transmitted monthly within five weeks of the end of each month.

### Monetary aggregates — Net foreign assets (NFA) of the NBR
- A floor applies to the NFA of the NBR for June 30, 2012 and December 31, 2012 targets.
- Definition: NFA in Rwanda francs are defined, consistent with the 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. Foreign assets and liabilities in U.S. dollars are converted to Rwanda francs using the U.S. dollar/Rwanda franc program exchange rate. Foreign assets and liabilities in other currencies are converted to U.S. dollars using the actual end-of-period U.S. dollar/currency exchange rate. Foreign liabilities include, inter alia, use of IMF resources (CCFF and post-conflict emergency assistance purchases and SAF/ESAF/ECF disbursements).
- Adjusters:
  - The floor on NFA will be adjusted downward by the amount of any shortfall between actual and programmed budgetary loans and grants, capped at the equivalent of US$80 million, evaluated in Rwanda francs at the program exchange rate. In case of excess of actual over programmed budgetary loans and grants, the floor of the NFA remains unchanged for the first US$24 million; subsequently, the floor will be adjusted upwards by any amount in excess of US$24 million, evaluated in RWF at the program exchange rate.
  - The floor on NFA will be adjusted upward (downward) by the amount of shortfall (excess) between actual and programmed encumbered reserve assets, evaluated in Rwanda francs at the program exchange rate.
  - The floor on NFA will be adjusted downward by the amount of expenditure for food imports in the case of a food emergency, evaluated in Rwanda francs at the program exchange rate.

*Source: _cr12152 - 6. Complete the rating of SACCOs and selection of those that qualify for consolidation at district level*

### 33.       Reporting requirement. Data on foreign assets and foreign liabilities of the NBR will be

### _cr12152 - 33.       Reporting requirement. Data on foreign assets and foreign liabilities of the NBR will be

### Reporting requirements — foreign assets and liabilities of the NBR
- Data on foreign assets and foreign liabilities of the NBR will be transmitted on a weekly basis within seven days of the end of each week.
- Transmission will include breakdown of assets that are pledged or encumbered.
- Transmission will include daily and weekly data on the NBR’s foreign exchange liabilities to commercial banks (including required reserves with the NBR).
- The exchange rate used for their conversion into Rwanda francs will be shown separately.

### Reserve money — targets, definition, adjuster, and reporting
- A ceiling applies to the stock of reserve money for the June 30, 2012 and December 31, 2012 targets.
- The stock of reserve money target for a given quarter will be calculated as the arithmetic average of the stock of reserve money at the end of each calendar month in the quarter.
- Daily average of all the three months in the quarter will constitute the actual reserve money to be compared with the target.
- Reserve money is defined as the sum of currency in circulation, commercial banks’ reserves, and other nonbank deposits at the NBR.
- Adjuster:
  - The ceiling on the stock of reserve money will be adjusted symmetrically for a change in the required reserve ratio of commercial banks.
  - The adjustor will be calculated as (new reserve ratio minus program baseline reserve ratio) multiplied by actual amount of liabilities (Rwanda Franc plus foreign-currency denominated) in commercial banks.
- Reporting requirement:
  - Data on reserve money will be transmitted on a weekly basis within seven days of the end of each week.
  - This transmission will include a daily and a weekly balance sheet of the NBR which will show all items listed above in the definitions of reserve money.

### Programmed encumbered reserve assets (quarterly cumulative amounts)
- US$40.0 million (March 2012)
- US$40 million (June 2012)
- US$71 million (September 2012)
- US$71 million (December 2012)

### Other data reporting requirements and timetables
- For program monitoring, the Government of Rwanda will provide data listed in Table 1:
  - weekly data within seven days of the end of each week;
  - monthly data within five weeks of the end of each month;
  - annual data as available.
- The authorities will inform the IMF staff in writing at least ten business days (excluding legal holidays in Rwanda or in the United States) prior to making any changes in economic and financial policies that could affect the outcome of the financial program. Such policies include but are not limited to customs and tax laws (including tax rates, exemptions, allowances, and thresholds), wage policy, and financial support to public and private enterprises.
- The authorities will similarly inform the IMF staff of any nonconcessional external debt contracted or guaranteed by the government, the NBR, or any statutory bodies, and any accumulation of new external payments arrears on the debt contracted or guaranteed by these entities.
- The authorities will furnish an official communication to the IMF describing program performance of quantitative and structural assessment criteria and benchmarks within 8 weeks of a test date.
- The authorities will on a regular basis submit information to IMF staff with the frequency and submission time lag as indicated in Table 1.
- Submission channel: The information should be mailed electronically to the Fund (email: afrrwa@imf.org).

### Selected reporting frequencies from Table 1 (exact labels preserved)
- Exchange Rates: D (Daily) / W (Weekly) / D (Daily)
- 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
- Volume of transactions in the interbank money market and foreign exchange markets and sales of foreign currencies by NBR to commercial banks: D / W / W
- Liquidity Forecast Report: W / W / -W-
- Consumer Price Index: M / M / M
- Composite Index of Economic Activity (CIEA) and sub-components compiled by the NBR: M / M / M
- Revenue, Expenditure, Balance and Composition of Financing – General Government: M / M / M
- Revenue, Expenditure, Balance and Composition of Financing – Central Government: M / M / M
- Comprehensive list of tax and non tax revenues: M / M / M
- Comprehensive list of domestic arrears of the government: M / M / M
- Stocks of public sector and public-Guaranteed Debt as compiled by MINECOFIN and NBR: A / A / A
- External Current Account Balance: A / SA / A
- Exports and Imports of Goods and subcomponents: M / M / Q
- Exports and Imports of Goods and Services and subcomponents: A / A / A
- GDP/GNP: A, Q / Q, SA / Q

*Source: Excerpt from IMF staff report informational annex (table and text as provided).*

### 2003. A Financial Sector Assessment Program (FSAP) took place in February 2005, and a FSAP

### RWANDA: Joint Bank-Fund Work Program and IMF Policy Support Instrument Review

### Financial Sector Assessments
- A Financial Sector Assessment Program (FSAP) took place in February 2005, and a FSAP update was completed in June 2011.
- Rwanda has not had an Offshore Financial Center (OFC) assessment.

### Policy Support Instrument (PSI)
- A three-year PSI program was approved on June 16, 2010, with an effective date of June 30, 2010.
- The second review under the PSI was completed on June 23, 2011.
- The third review under the PSI was completed on January 9, 2012.
- The Executive Board completed the fourth review under the PSI on June 7, 2012; the Executive Board’s decision was taken on a lapse of time basis.
- In completing the review, the Executive Board approved the modification of the end-June 2012 assessment criteria.
- The Executive Board approved a three-year PSI for Rwanda on June 16, 2010 (see Press Release No. 10/247).

### Macroeconomic Performance and Risks (from Press Release No. 12/209, June 8, 2012)
- Real GDP growth is estimated at 8.6 percent for 2011, driven by agricultural output, exports, and domestic demand.
- Inflation rose sharply—mainly due to rising food and fuel prices but also an accommodative monetary policy—but stayed in single digits (8.3 percent in March 2012) and was the lowest in the region.
- All quantitative assessment criteria for end-December 2011 including fiscal and monetary targets were met.
- Most structural benchmarks were also met, albeit some with delays.
- Rwanda continues to be assessed at moderate risk of external debt distress.
- Growth is expected to remain high in 2012, but risks remain—a renewed global slowdown or sharply higher world fuel prices could threaten growth, revenue, and inflation objectives.
- The fiscal framework for 2012/13 is in line with the main objectives of the PSI; the authorities committed to delay non-priority spending rather than resort to additional domestic financing if revenue collections fall short of target.

### Monetary and Financial Policy Guidance
- Monetary policy is aimed at maintaining inflation in single digits.
- Efforts are continuing to improve the liquidity management framework.
- It will be important to be proactive in monetary policy and improve the functioning of the money and foreign exchange markets.
- Improving access to financial services while safeguarding financial stability remains a key objective.
- Careful management of the consolidation of Savings and Credit Cooperatives will be very important.

### Technical Assistance (2011–2012) — Missions Listed
- 2011: STA/AFRITAC East mission on national accounts statistics.
- 2011: MCM mission on payment systems oversight.
- 2011: STA mission on improving quality of fiscal data.
- 2011: FAD mission on improving customs administrative efficiency.
- 2011: FAD mission on financial manual-legal requirements alignment.
- 2011: STA mission on national accounts statistics.
- 2011: MCM mission on strengthening regulatory framework.
- 2011: FAD mission on strengthening HQ functions and customs risks management.
- 2011: FAD mission on improving consistency of microeconomic databases.
- 2011: FAD mission on tax administrative reform priorities for tax compliance.
- 2011: FAD mission on regional workshop on strengthening systems and structures.
- 2011: FAD mission on gaps and options of public financial aid.
- 2011: FAD mission on tax administration capacity for auditing.
- 2011: FAC mission on TSA project.
- 2011: MCM mission on developing a medium term debt management strategy.
- 2011: MCM mission on enhancing monetary operations, foreign exchange operations and markets, and banking supervision.
- 2011: FAD mission on review of Organic Budget Law.
- 2012: STA mission on trade price indices.
- 2012: MCM mission on developing AML/CFT offsite tools.
- 2012: STA mission on quarterly national accounts.
- 2012: FAD mission on TSA project follow-up.
- 2012: STA mission on developing a framework for market risk.
- 2012: FAD mission on development of TSA project.
- 2012: STA mission on balance of payment statistics follow-up.
- 2012: FAD mission on program budgeting.
- 2012: FAD mission on establishment of tax administration reform priorities.
- 2012: FAD mission on smart IFMIS follow-up.
- 2012: FAD mission on macroeconomic framework capacity.
- 2012: mission on development of reporting guidelines for annual reports.

### Future Technical Assistance Priorities
- Monetary and exchange rate management.
- Supervision of bank and nonbank financial institutions.
- Public finance management.
- Tax policy and administration.
- Compilation of national account statistics.

### IMF Engagement and Resident Representation
- Mr. Dmitry Gershenson assumed his duties as Resident Representative in February 2009.
- The Deputy Managing Director, Mr. Portugal, visited Rwanda during May 3–5, 2007.

### Joint Bank‑Fund Work Program (Selected IMF Work Program Entries and Timing)
- Fourth Review Under the Policy Support Instrument — March 2012 (expected delivery date: June 2012).
- Fifth Review Under the Policy Support Instrument — October 2012 (expected delivery date: December 2012).
- Analytical work scheduled for June 2012: Understanding the Exchange Rate Pass-Through to Domestic Prices in the EAC Region; Estimating the Behavioral Equilibrium Exchange Rate for the EAC Countries; Monetary Policy Transmission in EAC Countries.
- Ongoing technical assistance: fiscal (tax policies; tax and customs administration; planning and budget practices; legal and regulatory frameworks); monetary (monetary policy operations; bank liquidity; interbank markets in local currency and foreign exchange); financial (bank supervision); statistics (national accounts and price indexes).

*Source: Excerpted content from the IMF document provided.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2012/_cr12152.pdf_