## IMF Executive Board Completes Third Review Under the Policy Coordination Instrument (PCI) for Rwanda _IMF News, December 16, 2020_ ## Source details **Canonical URL:** [IMF Executive Board Completes Third Review Under the Policy Coordination Instrument (PCI) for Rwanda](https://www.imf.org/en/news/articles/2020/12/16/pr20376-rwanda-imf-executive-board-completes-third-review-under-the-pci) ## Other formats - [Markdown version](/en/news/articles/2020/12/16/pr20376-rwanda-imf-executive-board-completes-third-review-under-the-pci/index.md) - [Structured JSON version](/en/news/articles/2020/12/16/pr20376-rwanda-imf-executive-board-completes-third-review-under-the-pci/index.json) - [Bundle manifest](/en/news/articles/2020/12/16/pr20376-rwanda-imf-executive-board-completes-third-review-under-the-pci/bundle-manifest.json) ## Bibliographic details - Published: December 16, 2020 --- ### Overview and Program Context - The Executive Board concluded the third review of Rwanda’s program supported by the IMF’s Policy Consultation Instrument (PCI) on December 16, 2020. - The PCI program was approved on June 28, 2019 to support the implementation of Rwanda’s National Strategy for Transformation (NST). - The PCI expires in June 2022 and remains appropriate to balance sustaining the economic recovery and maintaining fiscal responsibility. ### Economic outlook and recent performance - Real GDP contracted by 4.4 percent year-on-year in the first half of 2020. - Real GDP is projected to be slightly negative at -0.2 percent in 2020 and rebound to 5.7 percent in 2021. - Recovery momentum followed the end of the full lockdown in the second half of 2020. - Headline projections and selected price indicators from Table 1: - Real GDP: 2019: 8.5; 2020: -0.2; 2021: 5.7; 2022: 6.8; 2023: 7.5. - GDP deflator: 2019: 1.8; 2020: 5.6; 2021: 1.0; 2022: 2.3; 2023: 4.3. - CPI (period average): 2019: 2.4; 2020: 5.4; 2021: 6.9; 2022: 2.5; 2023: 4.1. ### Policy response to COVID-19 and fiscal outcomes - Authorities adopted early stringent containment measures and implemented a large policy package to support households, businesses, healthcare spending, and banking system liquidity. - Fiscal impacts and projections: - Fiscal deficit is expected at 8.5 percent of GDP in FY2020/21. - Public debt projected at 67 percent of GDP at end-2020 (statement in text). - Fiscal aggregates from Table 1 (selected): - Total revenue and grants: 2019: 23.6; 2020: 20.1; 2021: 20.6; 2022: 23.2; 2023: 23.8; 2024: 23.9; 2025: 23.3. - Of which: tax revenue: 2019: 16.6; 2020: 16.9; 2021: 16.5; 2022: 15.6; 2023: 15.9. - Expenditure: 2019: 31.9; 2020: 29.0; 2021: 31.7; 2022: 27.2; 2023: 30.2; 2024: 28.3. - Current expenditure: 2019: 14.5; 2020: 14.6; 2021: 15.8; 2022: 13.9; 2023: 13.4. - Capital expenditure: 2019: 12.7; 2020: 12.9; 2021: 11.9; 2022: 10.9. - Primary balance: 2019: -6.9; 2020: -4.2; 2021: -9.9; 2022: -6.0; 2023: -5.2; 2024: -3.0; 2025: -2.0. - Overall balance: 2019: -12.7; 2020: -10.0; 2021: -16.2; 2022: -13.5; 2023: -10.2; 2024: -12.2; 2025: -11.5. ### Debt dynamics and risks - Public debt and related indicators from Table 1: - Total public debt incl. guarantees: 2019: 59.0; 2020: 58.1; 2021: 68.1; 2022: 75.7; 2023: 71.1; 2024: 76.3; 2025: 73.7. - Of which: external public debt: 2019: 46.0; 2020: 45.4; 2021: 55.0; 2022: 61.9; 2023: 58.4; 2024: 63.0; 2025: 60.7. - PV of total public debt incl. guarantees: 2019: 44.5; 2020: 43.1; 2021: 45.5; 2022: 52.5; 2023: 48.8; 2024: 50.6; 2025: 50.9. - The Executive Board and staff highlighted the critical need to monitor and contain fiscal risks including from state-owned enterprises and state-guaranteed loans. ### Monetary and financial sector conditions - Monetary policy stance and financial measures: - Monetary policy has been accommodative. - Temporary extraordinary measures provided liquidity to the banking sector. - Emphasis on data-driven monetary policy going forward and close monitoring of credit and liquidity risks, including from loan restructuring, to safeguard financial stability. - Selected monetary and credit indicators from Table 1: - Broad money (M3) growth rates: 2019: 21.8; 2020: 21.9; 2021: 11.3; 2022: 22.3; 2023: 12.0; 2024: 16.1; 2025: 13.6. - Reserve money: 2019: 21.5; 2020: 22.1; 2021: 12.1; 2022: 21.4; 2023: 11.2; 2024: 20.3; 2025: 19.8. - Credit to non-government sector: 2019: 17.6; 2020: 14.8; 2021: 14.1; 2022: 10.3; 2023: 11.4; 2024: 14.0; 2025: 13.7. - M3/GDP (percent): 2019: 27.9; 2020: 29.8; 2021: 27.0; 2022: 28.9; 2023: 28.0; 2024: 29.6; 2025: 28.5. ### External sector and reserves - External sector indicators from Table 1: - Exports (goods and services): 2019: 13.1; 2020: 21.2; 2021: 26.8; 2022: 27.7. - Imports (goods and services): 2019: 34.9; 2020: 34.1; 2021: 34.4; 2022: 33.8. - Current account balance (incl grants): 2019: -12.4; 2020: -10.5; 2021: -11.4; 2022: -8.4. - Gross international reserves (In millions of US$): 2019: 1,367; 2020: 1,553; 2021: 1,643; 2022: 1,461; 2023: 1,463; 2024: 1,598; 2025: 1,556; 2024/alternate: 1,834 (table entries reflect multiple year columns). ### Structural reforms and medium-term priorities - Immediate policy priorities have shifted toward crisis response, but the PCI’s objectives remain focused on: - Accelerating transition to private sector-led growth in the post-pandemic period given limited fiscal space. - Continuing structural reforms to promote private sector-led and inclusive growth. - Strengthening governance, fiscal transparency, and risk management. - Improving tax compliance. - Further strengthening the interest rate-based monetary policy framework. - The crisis has affected progress on structural reforms; renewed efforts to push ahead with reforms are recommended. ### Executive Board / Staff recommendations and guidance - Key recommendations and guidance from Mr. Tao Zhang (Deputy Managing Director and Acting Chair): - Ensure strong reporting and procurement practices to guarantee effectiveness and oversight of crisis-related spending. - Pursue sound contingency planning and fiscal risk management given the uncertain outlook. - To preserve fiscal space, reprioritize spending and seek additional concessional financing should the outlook deteriorate further. - Closely monitor fiscal risks from state-owned enterprises and state-guaranteed loans. - Keep monetary policy data driven and monitor credit and liquidity risks, including from loan restructuring. - Adopt a credible and growth-friendly fiscal consolidation strategy after the crisis abates to preserve debt sustainability while supporting the nascent recovery. - The strategy should center on measures to re-ignite domestic revenue mobilization, streamline non-priority spending, and re-prioritize public investment. - Such measures could be announced and legislated before the end of the program to support their credibility. *Source: IMF Press Release No. 20/376, “IMF Executive Board Completes Third Review Under the Policy Coordination Instrument (PCI) for Rwanda,” December 16, 2020.* --- ## References - [https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg) - [The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx) - [Rwanda and the IMF](http://www.imf.org/external/country/RWA/index.htm) - [Press Releases](https://www.imf.org/en/news/searchnews) - [PRESS CENTER](http://presscenter.imf.org/) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2020/12/16/pr20376-rwanda-imf-executive-board-completes-third-review-under-the-pci_