An International Monetary Fund (IMF) staff team, led by Laure Redifer,
visited Kigali during October 31- November 13, 2019 to hold discussions on
the first review of Rwanda’s Policy Consultation Instrument (PCI)-supported
program.
[1]
Ms. Redifer issued the following statement at the end of the visit:
“Economic activity outpaced expectations in the first half of 2019, with
real GDP growing by 10.3 percent, based on a pronounced increase in
construction and services activity. The uptick in construction reflects
both public infrastructure projects and private investment. Growth is
projected to remain strong, at around 8 percent, over the next 2-3 years.
Inflation picked up in recent months, as expected, partly reflecting
stronger domestic demand. This was supported by the decision of the
Monetary Policy Committee (MPC) of the National Bank of Rwanda (BNR) to
lower interest rates in May. Inflation came back within the central bank’s
targeted band in August and is forecast to continue on an upward trend
towards the target midpoint of 5 percent. Thus, in its August meeting, the
MPC chose to leave its policy rate unchanged.
“The FY2018/19 fiscal deficit was higher than expected, due to the timing
of budget support disbursements, as well as accelerated execution of
externally financed projects. The current account deficit widened, as
expected, reflecting stronger demand and more capital goods imports that
are needed for construction. At the same time, prices for traditional
exports dropped, largely offsetting increases in the volume of exports,
particularly within the East African Community region.
“Performance in implementation of Rwanda’s program with the IMF has
remained satisfactory, with almost all program targets met. This new
program, supported by the IMF’s Policy Coordination Instrument (PCI), was
approved by the IMF Executive Board in June 2019. The program aims to
support implementation of the National Strategy for Transformation (NST)
via four main pillars: (i) creating budget space for NST implementation
while preserving fiscal and debt sustainability; (ii) improving fiscal
transparency, including the identification and management of potential
government liabilities (“fiscal risks”); (iii) regaining momentum on
domestic revenue mobilization; and (iv) supporting implementation of the
BNR’s forward-looking monetary policy framework that uses interest rates to
control policy impulses.
“Looking forward, policy discussions focused largely on how the government
budget should accommodate the size and pace of additional spending on NST
investments in a wide array of sectors, including education, health, and
infrastructure. Better tracking of public sector assets and liabilities and
associated risks should provide more space for priority spending, as should
ongoing reforms to maximize collection of domestic revenues. The use of
technology, schemes to attract private investment via de-risking, and
strategic investment should serve to leverage public resources for greater
impact. The BNR continues to strengthen communication around its inflation
forecasts and the rationale for its policy decisions.
“The IMF staff team met with Minister of Finance and Economic Planning, Dr.
Uzziel Ndagijimana; Governor of the National Bank of Rwanda, John
Rwangombwa; Minister of Infrastructure, Claver Gatete; Minister of Trade
and Industry, Soraya Hakuziyaremye; Minister of Agriculture and Animal
Resources, Dr. Gerardine Mukeshimana; Minister of Information Communication
Technology and Innovation, Paula Ingabire; Minister of Health, Dr. Diane
Gashumba; Minister of State in charge of Economic Planning, Dr. Claudine
Uwera; Head of the Rwanda Development Board, Clare Akamanzi; Minister of
State for Primary and Secondary Education, Dr. Issac Munyakazi; the
Parliamentary Budget Committee, other senior government officials, private
sector representatives, and development partners. The team thanks all
partners for their generous time and candid discussions.”
[1]
Rwanda’s PCI-supported program was approved by the IMF Executive
Board on June 28, 2019 (see Press Release No. 19/258). The PCI is
an instrument of the IMF designed for countries that do not need
balance of payments financial support. Details of Rwanda’s current
PCI are available at www.imf.org/rwanda.
