Rwanda: Sixth Review Under the Policy Coordination Instrument and Monetary Policy Consultation Clause-Press Release; Staff Report; and Statement by the Executive Director for Rwanda
IMF Staff Country Reports, June 29, 2022
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- Rwanda: Sixth Review Under the Policy Coordination Instrument and Monetary Policy Consultation Clause-Press Release; Staff Report; and Statement by the Executive Director for Rwanda
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Bibliographic details
- Published: June 29, 2022
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400212864.002
Context and macroeconomic environment
- Rwanda continues to implement its Economic Recovery Plan while confronting the lingering effects of the pandemic and the spillovers from the war in Ukraine.
- Headline inflation has been on the rise since the beginning of the year.
- Rising inflationary pressures, exacerbated by rising commodity prices, are compounding the policy challenges of balancing economic recovery with maintaining price stability.
Key findings and analysis
- Rising inflationary pressures require monetary policy vigilance to anchor inflation expectations.
- The policy challenges combine:
- lingering pandemic effects;
- spillovers from the war in Ukraine; and
- rising commodity prices that exacerbate inflation.
- Policies under the Policy Coordination Instrument (PCI) support:
- recovery from the pandemic;
- measures to mitigate headwinds from the war in Ukraine;
- maintenance of macroeconomic stability; and
- implementation of the medium-term fiscal consolidation strategy to preserve debt sustainability.
- The PCI also supports reform efforts, including:
- financial inclusion;
- digitization; and
- green public financial management (PFM), to deliver more inclusive and sustainable growth.
Policy recommendations
- Monetary policy:
- The National Bank of Rwanda should stand ready to tighten monetary policy more aggressively to anchor inflation expectations.
- Implementation of the interest-rate-based monetary policy framework should continue.
- Greater exchange rate flexibility is recommended to ensure external sustainability.
- Fiscal and structural policy:
- Continue implementing the medium-term fiscal consolidation strategy to preserve debt sustainability.
- Advance reforms supported under the PCI (financial inclusion, digitization, green PFM) to foster inclusive and sustainable growth.
Publication and metadata
- Pages: 73
- Volume: 2022
- Issue: 200
- Series: Country Report No. 2022/200
- DOI: https://doi.org/10.5089/9798400212864.002
- Stock No: 1RWAEA2022002
- ISBN: 9798400212864
- ISSN: 1934-7685
- Date on page: June 29, 2022
- Subjects: Financial institutions; Health; International organization; Monetary policy; Prices; Public debt; Public financial management (PFM)
- Keywords: consultation benchmark; COVID-19; Fiscal risks; Global; headline inflation; Inflation; inflation development; inflation expectation; interest-rate-based monetary policy framework; Loans; management practice
Source: International Monetary Fund — Rwanda: Sixth Review Under the Policy Coordination Instrument and Monetary Policy Consultation Clause; IMF Staff Country Reports 2022, 200.
Content in this bundle
- 1rwaea2022002 - Executive Summary