IMF Executive Board Completes First Reviews Under the Policy Coordination Instrument, and Resilience and Sustainability Facility for Rwanda
IMF News, May 24, 2023
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- Published: May 24, 2023
Executive summary and disbursement
- The Executive Board completed the first reviews of Rwanda’s Policy Coordination Instrument (PCI) and program under the Resilience and Sustainability Facility (RSF).
- The Board’s decision allows for an immediate disbursement of SDR 73.95 million (about US$ 98.6 million) under the RSF.
- The PCI and RSF arrangement were approved on December 12, 2022; the RSF total amount is SDR 240.3 million (about US$ 319 million or 150 percent of quota).
Economic performance and risks
- Rwanda’s economy recorded robust post-pandemic growth in 2022, but macroeconomic imbalances emerged.
- Inflation stood at 17.8 percent in April.
- Drivers of imbalances cited:
- Rising food prices.
- Strong domestic demand fueled by high credit growth.
- Robust import demand coupled with high commodity prices.
- Tightening global financing conditions and reduced prospects for external concessional financing.
- The outlook is subject to high uncertainty from:
- Risks of deepening geopolitical fragmentation.
- Volatility in global energy and fertilizer prices.
- A steeper-than-projected decline in trading partners growth.
- A funding squeeze.
- The costs of humanitarian response and reconstruction following recent floods will generate further spending needs.
Policy priorities and recommendations
- Immediate policy priorities:
- Implement a strong, carefully calibrated policy mix to prevent macroeconomic imbalances from becoming entrenched.
- Fiscal policy:
- Frontloaded fiscal policy adjustment is needed.
- Continued fiscal consolidation to provide space to withstand future shocks.
- Address delays in implementing the Medium-Term Revenue Strategy by promptly implementing revenue-raising measures aimed at broadening the tax base, streamlining exemptions, and enhancing tax compliance.
- Adopt more prudent, transparent, and credible public financial management and investment frameworks.
- Monetary and exchange rate policy:
- Decisive monetary policy tightening is needed to contain inflationary pressures and preserve external stability.
- Strengthen communication and pursue greater exchange rate flexibility.
- Implement reforms to deepen financial and government securities markets to improve the effectiveness of the interest rate-based monetary policy framework.
- Financial sector and governance:
- Vigilance to ensure financial risks remain contained while promoting financial inclusion.
- Further strengthening of the AML/CFT framework is important.
- Climate and resilience:
- Continue reforms to allocate climate resources more effectively and transparently to mobilize additional climate funding and attract private green investment.
- Advance reforms in green public finance management and climate-focused public investment management.
- RSF-supported program will improve transparency and accountability in planning, execution, reporting, and oversight of budget resources dedicated to addressing climate change.
Program implementation and commitments
- Reforms remained broadly on track under the PCI despite a challenging environment.
- Rwanda’s commitment to advancing the climate agenda has been described as very strong.
- The RSF-supported program is the first for an African country and aims to build resilience to climate change through improved fiscal transparency and accountability for climate resources.
Key economic indicators (Table 1: Rwanda: Selected Economic Indicators, 2021–25)
- Output
- Real GDP growth (%): 2021: 10.9; 2022: 8.2; 2023: 6.2; 2024: 6.7; 2025: 6.9
- Prices
- Inflation - average (%): 2021: 0.8; 2022: 13.9; 2023: 14.5; 2024: 5.0
- Central government finances (fiscal year)1
- Revenue (% GDP): 2021: 25.0; 2022: 25.9; 2023: 22.7; 2024: 21.8; 2025: 22.9
- Expense (% GDP): 2021: 20.3; 2022: 20.6; 2023: 19.1; 2024: 18.5; 2025: 18.1
- Net acquisition of nonfin. Asset (% GDP): 2021: 12.2; 2022: 11.6; 2023: 9.8; 2024: 9.0; 2025: 9.4
- Fiscal balance (% GDP): 2021: -8.6; 2022: -7.6; 2023: -7.3; 2024: -6.5; 2025: -4.8
- Public debt (% GDP): 2021: 73.4; 2022: 67.1; 2023: 69.1; 2024: 74.4; 2025: 79.2
- External public debt (% GDP): 2021: 54.6; 2022: 48.7; 2023: 54.1; 2024: 60.9; 2025: 68.6
- Money and credit
- Broad money (% change): 2021: 17.1; 2022: 22.5; 2023: 11.3; 2024: 17.4; 2025: 12.4
- Credit to private sector (% change): 2021: 14.8; 2022: 13.6; 2023: 8.5; 2024: 17.7; 2025: 21.0
- Policy Rate, end-of-period (%): 2021: 4.5; 2022: 6.5; 2023: …
- Balance of Payments
- Current account (% GDP): 2021: -11.2; 2022: -9.8; 2023: -11.3; 2024: -10.5; 2025: -10.1
- Reserves (in months of imports): 2021: 5.1; 2022: 4.4; 2023: 4.8; 2024: 5.2
- Exchange rate
- REER (% change): 2021: -9.7; 2022: 8.3
1 Based on fiscal year (i.e. 2022 represents 2021/22). Sources: Rwandan authorities and IMF staff estimates.
IMF Press Release, May 24, 2023.
