Rwanda: First Review Under the Policy Coordination Instrument and Monetary Policy Consultation-Press Release; and Staff Report

IMF Staff Country Reports, January 17, 2020

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Rwanda: First Review Under the Policy Coordination Instrument and Monetary Policy Consultation-Press Release; and Staff Report

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Bibliographic details

• Published: January 17, 2020
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781513526706.002

Overview

• Discusses Rwanda’s First Review Under the Policy Coordination Instrument (PCI) and Monetary Policy Consultation.
• Rwanda’s macroeconomic performance under the program remains strong.
• The PCI-supported program focuses on creating budget space for the implementation of Rwanda’s National Strategy for Transformation (NST), improving fiscal transparency, boosting revenue, and supporting the implementation of the new interest rate-based monetary policy framework.

Macroeconomic performance and program focus

• Macroeconomic performance under the program is characterized as strong.
• Program objectives include:
  • Creating budget space for implementation of the National Strategy for Transformation (NST).
  • Improving fiscal transparency.
  • Boosting revenue.
  • Supporting implementation of the new interest rate-based monetary policy framework.

Fiscal policy, deficit path, and debt sustainability

• The fiscal deficit path is forecasted to adhere to the fiscal rule under the program, providing space for NST implementation while safeguarding debt sustainability.
• The government plans to finance the NST partly through public borrowing; this financing should be supported by careful debt management.

Revenue mobilization and tax administration

• Several plans are underway to increase domestic revenues by:
  • Boosting the registration of new taxpayers.
  • Implementing innovative schemes.
  • Greater use of technology to strengthen tax compliance.

Monetary policy developments

• The program supports the implementation of a new interest rate-based monetary policy framework.
• The policy consultation addresses interest rate instruments and the interest rate channel of monetary transmission.

Fiscal risks and public financial management

• Further progress on identifying and managing potential government liabilities—so-called fiscal risks—will be important to ensure public resources are well protected for use on priority spending.
• Emphasis on improving fiscal transparency and public financial management (PFM).

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