IMF Executive Board Approves $319 Million Arrangement for Rwanda Under the Resilience and Sustainability Facility, Plus a New Policy Coordination Instrument
IMF News, December 12, 2022
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- Published: December 12, 2022
Approval and financing
- The Executive Board approved an arrangement for Rwanda under the Resilience and Sustainability Facility (RSF) amounting to SDR 240.3 million (about US$ 319 million, or 150 percent of quota).
- Rwanda is the first African and low-income country to secure access to the RSF.
- The Executive Board also approved a new 36-month Policy Coordination Instrument (PCI).
Objectives and scope of the RSF-supported program
- Support Rwanda’s agenda to build resilience to climate change and help catalyze further financing.
- Improve transparency and accountability in the planning, execution, reporting, and oversight of budget resources dedicated to addressing climate change.
- Facilitate green public investment, create further fiscal space, mitigate financial risks, and strengthen public debt dynamics and prospective balance-of-payments stability.
- RSF reforms are expected to:
- Strengthen and institutionalize monitoring and reporting of climate-related spending.
- Integrate climate risks into fiscal planning.
- Improve the sensitivity of public investment management to climate-related issues.
- Strengthen climate-related risk management for financial institutions.
- Strengthen disaster risk reduction and management.
- Disbursements under the RSF will be contingent on conclusion of relevant reviews under the new 36-month PCI and implementation of scheduled reform measures agreed as part of the RSF arrangement.
Policy Coordination Instrument (PCI)
- New PCI term: 36 months.
- Purpose: support the authorities’ economic policy and reform agenda designed to maintain macroeconomic stability and foster more inclusive growth.
- The new PCI replaces an instrument approved on June 28, 2019.
- Program performance under the 2019 PCI: all quantitative and standard continuous targets through end-June 2022 met, and all but one of the reform targets through end-September 2022 completed.
- The new PCI places greater emphasis on policies to ensure macroeconomic stability, mitigate pandemic scars, build socioeconomic resilience to shocks, and insure against downside risks.
Key recommendations and authorities’ policy priorities (from Deputy Managing Director Bo Li)
- Timely implementation of a fiscal strategy and adoption of domestic revenue mobilization measures envisaged under the medium-term revenue strategy.
- Launch a spending rationalization strategy to enhance credibility of fiscal consolidation and safeguard debt sustainability.
- Strengthen capacity to manage fiscal risks and adopt more effective and transparent public financial and investment management practices.
- More decisive monetary tightening by the National Bank of Rwanda (NBR) to contain inflationary pressures.
- Ensure greater exchange rate flexibility for external stability.
- Continue monitoring the financial sector while deepening financial markets and promoting financial inclusion.
- Build socioeconomic resilience through adaptive social safety nets, human capital investments, economic diversification policies, and climate resilience reforms.
Program conditionality and links to financing
- RSF disbursements contingent on relevant PCI reviews and implementation of scheduled RSF reform measures, which establish Rwanda’s broad economic reform goals.
- The PCI is available to IMF members that do not need extensive Fund financial resources at the time of approval and is designed for countries seeking to demonstrate commitment to a reform agenda or to unlock and coordinate financing from other official creditors or private investors.
Selected macroeconomic and fiscal indicators (annual percentage change, unless otherwise indicated; series as presented)
- Real GDP: 9.5, -3.4, 10.9, 6.0, 6.8, 6.7, 6.2, 7.0, 7.5, 6.1
- GDP deflator: 2.5, 2.7, 9.3, 11.9, 8.7, 7.4, 5.5, 5.3, 5.4, 5.2, 5.0, 5.1
- CPI (period average): 2.4, 7.7, 0.8, `112.6, 8.0, 7.9
- CPI (end period): 3.7, 1.9, 8.8, 17.1, 6.5, 3.4
- Terms of trade (deterioration, -): -1.8, -0.9, 3.9, 11.1, -2.9, -7.5, -2.1, 0.3, -1.3, 0.7, -0.4, 0.2, -0.3
- Exchange rate (Rwanda franc/US$) (end of period): 922.5, 972.5, 1,009.6, 1,085.3, 1,060.0, 1,155.9, 1,134.2, 1,213.7, 1,207.9, 1,268.3, 1,279.2, 1,319.0, 1,331.6, 1,358.6, 1,383.5
- Exchange rate (Rwanda franc/US$) (period average): 899.5, 943.3, 988.9, 1,047.5, 1,034.8, 1,120.6, 1,097.1, 1,184.8, 1,171.0, 1,241.0, 1,243.5, 1,293.7, 1,305.4, 1,332.5, 1,357.6
- Broad money (M3) growth: 15.4, 18.0, 17.8, 15.8, 19.5, 14.2, 12.3, 15.0, 15.5, 11.4, 11.5
- Reserve money growth: 16.0, 21.7, 30.7, 8.1, 12.2, 10.3
- Credit to non-government sector: 12.6, 21.8, 14.7, 11.0, 10.8, 13.7, 21.3, 21.2, 19.4, 25.7, 10.7, 17.6, 14.5, 16.9
- M3/GDP (percent): 29.4, 30.4, 29.9, 30.5, 31.2
- Budgetary central government, FY basis — Revenue (percent of GDP): 23.1, 23.3, 25.0, 25.3, 25.9, 24.6, 23.6, 22.9, 23.2, 24.1, 23.8, 24.2
- Taxes (percent of GDP): 15.7, 15.9, 16.5, 17.3, 17.2, 17.5
- Grants (percent of GDP): 6.9, 6.6, 4.4
- Expense (percent of GDP): 20.5, 20.2, 20.3, 20.6, 19.3, 18.2, 18.6, 18.4, 18.1, 17.0
- Net acquisition of nonfinancial assets (percent of GDP): 11.2, 12.4, 11.6, 9.6, 9.9, 10.1, 10.2
- Net lending (+) / borrowing (-) (NLB) (percent of GDP): -8.6, -7.9, -7.6, -6.3, -5.7, -6.9, -4.9, -5.6, -4.7, -3.2, -3.0
- NLB excluding grants (percent of GDP): -11.6, -12.4, -13.0, -13.5, -13.2, -12.1, -9.3, -10.0, -8.8, -9.2, -7.4, -7.3, -6.7
- Net incurrence of liabilities (percent of GDP): 6.4, 8.9, 9.0, 10.4
- Domestic (percent of GDP): 2.2, -0.5, 1.8, -0.6, 1.7
- Foreign (percent of GDP): 8.6, 6.3, 3.2
- Overall fiscal balance (incl. grants, policy lending) (percent of GDP): -8.1, -9.1, -8.7, -6.1, -6.5, -5.2
- Public debt — Total public debt incl. guarantees (percent of GDP): 56.8, 72.4, 73.3, 73.1, 71.3, 75.2, 73.9, 75.9, 76.8, 74.2, 77.3, 73.6, 75.7, 71.7
- External public debt incl. guarantees (percent of GDP): 44.3, 56.4, 54.5, 57.6, 53.0, 58.0, 55.9, 60.8, 60.1, 63.1, 59.1, 62.5, 62.1
- External public debt incl. guarantees, PV (percent of GDP): 29.7, 34.0, 34.9, 36.1, 33.6, 38.2, 35.8, 39.2, 38.9, 38.7, 40.4, 37.6, 39.9, 35.7, 39.5
- Total public debt incl. guarantees, PV (percent of GDP): 42.9, 51.1, 54.4, 52.7, 56.6, 55.0, 55.3, 56.1, 53.7, 55.8, 52.9, 53.9, 51.3, 52.1
- Investment (percent of GDP): 23.5, 25.1, 26.3, 25.8, 24.5, 28.4, 29.0, 28.6, 29.5, 28.9, 28.2, 28.1
- Savings (excl. grants) (percent of GDP): 16.3, 15.6, 17.7, 0.9, 4.3, 10.0, 13.0, 14.9, 14.4, 13.4
- Exports (goods and services) (percent of GDP): 18.9, 19.1, 23.4, 27.1, 28.5, 26.6, 28.8, 26.7, 29.2, 27.0
- Imports (goods and services) (percent of GDP): 35.1, 34.8, 41.7, 40.0, 41.2, 41.1, 40.8, 41.4, 40.9, 40.2, 38.5, 40.1, 38.0
- Current account balance (incl. grants) (percent of GDP): -11.9, -10.9, -12.6, -10.5, -11.7, -8.9, -11.0, -7.7
- Gross international reserves (In millions of US$): 1,382, 1,722, 1,889, 1,868, 1,894, 1,869, 2,052, 2,063, 2,309, 2,093, 2,378, 2,229, 2,442, 2351, 2643
- Gross international reserves (In months of next year's imports): 5.6
- GDP at current market prices — Rwanda francs (billion), CY basis: 9,314, 9,607, 10,944, 12,672, 13,075, 14,698, 14,904, 16,585, 16,880, 18,800, 19,083, 20,942, 21,429, 23,340, 23,898
- Nominal growth (percent): 13.9, 14.0, 13.3, 13.1
- Population (million): 12.7, 13.6, 14.8
Source: IMF Executive Board press release, December 12, 2022.