An International Monetary Fund (IMF) staff team, led by Laure Redifer,
visited Kigali during March 11-22, 2019 to hold discussions on a new
three-year Policy Coordination Instrument (PCI) and the 2019 Article IV
Consultation.
Ms. Redifer issued the following statement at the end of the visit:
“Following the successful completion of its 2013-18 PSI-supported program,
Rwanda continues to make notable progress in sustaining high and inclusive
growth. Real GDP growth reached 8.6 percent in 2018, driven by robust
activity in all sectors of the economy. At the same time, inflation has
remained well below the central bank’s targeted inflation range (2-8%),
reflecting ample food supplies and low inflationary pressures. Fiscal
performance for the first half of FY18/19 has been consistent with agreed
targets. In 2018, the Rwandan franc depreciated by 4 percent against the
US$ and external balances continued to improve, with international reserves
rising above 4.5 months of next year’s goods and services import bill.
“Growth is projected to remain strong in 2019 at 7.8 percent, and over the
medium term at around 8 percent. Growth will be bolstered by the
government’s continued implementation of its National Strategy for
Transformation, which has already resulted in strong investment inflows,
diversified exports, and more resilient agriculture. Other large
investments, such as Bugesera airport, Hakan peat plant, and electricity
infrastructure, will also bolster growth. Over the longer term, extensive
private and government investment in manufacturing, tourism, agriculture,
ICT, health and education, among others, should indeed transform the
Rwandan economy into higher value-added activities, and boost per capita
incomes and living standards.
“Inflation is expected to remain low in the first half of 2019, picking up
in the second half of 2019 for an average of 3.5 percent for the year. The
inflation forecast, however, depends on the Season A outcome, international
prices, and accommodative fiscal and monetary policies. Very low inflation
below the BNR’s targeted range, should it continue over an extended period,
could undermine the growth contribution of the private sector. Over the
medium term, inflation is expected to return to around its benchmark of 5
percent.
“The Rwandan government and the IMF staff team reached preliminary
agreement, subject to approval by IMF management and its Executive Board,
on policies that could constitute the basis for Rwanda’s new program with
the IMF under the new Policy Coordination Instrument (PCI).
[1]
The overall objective of the program would be to support implementation of
the National Strategy for Transformation, while maintaining macroeconomic
stability. The program would consist of four main pillars: (1) a medium
term fiscal path that allows for more spending to reach NST goals while
maintaining public debt at a sustainable level; (2) regaining momentum in
mobilizing domestic resources to support development goals, including
through broadening the tax base and strengthening tax compliance; (3)
building on efforts to further enhance fiscal transparency; and (4)
supporting implementation of the National Bank of Rwanda’s new
forward-looking monetary policy operational framework, including through
development of financial markets and broader access within the economy to
financial resources.
“The IMF staff team met with Minister of Finance and Economic Planning,
Uzziel Ndagijimana; Minister of Trade and Industry, Soraya Hakuziyaremye;
Minister of Agriculture and Animal Resources, Gerardine Mukeshimana;
Minister of Infrastructure, Claver Gatete; Governor of the National Bank of
Rwanda, John Rwangombwa; and other senior government officials, private
sector representatives, and development partners. The team thanks all
stakeholders for their generous time in engaging in candid discussions.”
[1]
The PCI is an instrument introduced by the IMF in 2017 to support
countries that can benefit from the policy framework provided under
an IMF program, but do not require IMF financial support.
