IMF Executive Board Approves a US$109.4 Million Disbursement to Rwanda to address the COVID-19 Pandemic
IMF News, April 2, 2020
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- Published: April 2, 2020
Disbursement and purpose
- The Executive Board approved the disbursement of SDR80.1 million (about US$109.4 million) to be drawn under the Rapid Credit Facility (RCF).
- Purpose: to meet Rwanda’s urgent balance of payments needs stemming from the outbreak of the COVID-19 pandemic.
- The RCF funds will:
- backstop the decline in international reserves;
- provide financing to the budget for increased spending aimed at containing the epidemic and mitigating its economic impact;
- help catalyze further assistance from the international community, preferably in the form of grants.
Economic context and authorities’ actions
- The economic impact of the COVID-19 pandemic is described as "rapidly unfolding, with the near-term outlook deteriorating quickly."
- Authorities have acted fast by putting in place measures to help contain and mitigate the spread of the disease.
- The IMF will continue to monitor Rwanda’s situation closely and stands ready to provide policy advice and further support as needed.
Key messages from the Acting Chair (Mr. Tao Zhang)
- “The COVID-19 Pandemic has ground Rwanda’s economy to a halt, creating an urgent balance of payments need.”
- Government measures to contain the virus have affected all sectors of the economy; with uncertainties about duration and spread, the economic fallout could intensify further.
- RCF emergency support will help with COVID19-related pressures on trade, tourism and foreign exchange reserves, and will provide resources for health expenditure and for households and firms affected by the crisis; it should also help to catalyze donor support.
- Fiscal policy guidance:
- A temporary widening of the budget deficit is appropriate to mitigate the health and economic impact of the pandemic.
- Spending should be well-targeted and cost-effective to not crowd-out other priority areas.
- Once the crisis abates, the fiscal adjustment path should be adjusted to preserve debt sustainability in the medium-term.
- Contingency plans should be prepared given the uncertain outlook.
- Monetary and financial sector guidance:
- Monetary policy needs to be data-driven and the central bank should stand ready to provide additional liquidity support if warranted.
- A flexible exchange rate should be maintained as a shock absorber.
- The National Bank of Rwanda has taken various measures to help maintain the health of the financial sector and should continue to show flexibility, while encouraging prudent loan restructuring and stepping up reporting requirements.
- “Additional donor support is critical to close the remaining financing gap, ease the adjustment burden, and preserve Rwanda’s development gains over the last two decades.”
Selected economic indicators (2018–22) — highlights from Table 1
- Real GDP (annual percentage change):
- 2018: 8.6
- 2019: 10.1
- 2020 (Prel.): 5.1
- 2021 (Proj.): 6.7
- 2022 (Proj.): 8.0
- GDP deflator:
- 2018: -0.8
- 2019: 1.2
- 2020: 6.5
- 2021: 5.4
- 2022: 5.0
- CPI (period average):
- 2018: 1.4
- 2019: 2.4
- 2020: 6.9
- Broad money (M3) (annual percentage change):
- 2018: 15.6
- 2019: 15.4
- 2020: 11.0
- 2021: 18.6
- 2022: 13.4
- NPLs (percent of total gross loans):
- 2018: 6.4
- 2019: …
- Budgetary central government (Percent of GDP):
- Total revenue and grants:
- 2018: 24.1
- 2019: 23.6
- 2020: 21.5
- 2021: 23.3
- 2022: 23.0
- Expenditure:
- 2018: 28.8
- 2019: 31.7
- 2020: 31.8
- 2021: 29.7
- 2022: 27.9
- Overall balance:
- 2018: -4.7
- 2019: -8.1
- 2020: -10.3
- 2021: -6.5
- 2022: -4.9
- Public debt:
- Total public debt incl. guarantees:
- 2018: 53.1
- 2019: 58.4
- 2020: 46.2
- 2021: 64.3
- 2022: 66.2
- PV of total public debt incl. guarantees:
- 2018: 40.9
- 2019: 42.6
- 2020: 47.3
- 2021: 48.1
- 2022: 47.2
- External sector:
- Current account balance (incl grants):
- 2018: -8.0
- 2019: -9.2
- 2020: -16.0
- 2021: -10.2
- 2022: -9.8
- Gross international reserves (In millions of US$):
- 2018: 1,319
- 2019: 1440
- 2020: 1,001
- 2021: 1,161
- 2022: 1,322
- In months of next year's imports:
- 2018: 4.7
- 2019: 2.9
- 2020: 3.0
- 2021: 3.3
- Memorandum items:
- GDP at current market prices, Rwanda francs (billion):
- 2018: 8,189
- 2019: 9,121
- 2020: 10,210
- 2021: 11,476
- 2022: 13,012
- Population (million):
- 2018: 12.4
- 2019: 13.0
IMF Communications Department; Press Release No. 20/130; April 2, 2020. Media relations: PRESS OFFICER: Meera Louis; Phone: +1 202 623-7100; Email: MEDIA@IMF.org; @IMFSpokesperson
