The Executive Board of the International Monetary Fund (IMF) has today, May 22, 2024, approved a total funding of $164.6 million to Rwanda, a statement from the IMF has said.
The announcement was made following a review of Rwanda’s implementation of the Policy Coordination Instrument, an IMF programme that supports countries to implement macroeconomic policies aimed at preventing crises and building buffers against external shocks.
It also follows a review of the country’s implementation of the Resilience and Sustainability Facility (RSF) and the Standby Credit Facility (SCF), both of which are instruments that provide funding to countries to fight against climate shocks and those with short term balance of payment needs.
The IMF said in a statement that the approval by the Board allows for an immediate disbursement of about $76.2 million (SDR 57.5 million) under the RSF and $88.4 million (SDR 66.75 million) under the SCF.
The Washington-based lender maintained that programme performance under the two arrangements has been strong, with successful implementation of reforms on social safety nets and spending rationalization.
"Progress on the climate agenda under the RSF also remains strong, bolstering Rwanda's resilience to climate shocks,” reads the statement in part.
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The IMF said that despite challenging external conditions and ongoing fiscal consolidation, Rwanda's economy maintains robust growth, recommending that going forward, the policy mix should prioritise macroeconomic and financial stability, fiscal sustainability, and the restoration of buffers.
Rwanda’s economic growth surpassed expectations in 2023 at 8.2 per cent, with services, construction, and post-flood recovery in food crop production key contributors.
Inflation has declined steadily since January 2023 to 4.2 per cent in March this year, thanks to a slowdown in food prices and core inflation.
The National Bank of Rwanda (BNR) has consistently hiked the policy rate to deal with rising inflationary pressures. This has in part contributed to stabilising consumer prices.
The current account deficit widened more than expected in 2023, but international reserves remain adequate at about 4.1 months of imports at end-2023.
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However, Rwanda’s public debt remains high. Public debt reached 73.5 per cent of GDP and is estimated to rise to 80 per cent in 2024, before starting to come down to 77.5 per cent in 2025 and 74.6 per cent in 2026.
The total external debt stood at 56.9 per cent of GDP in 2023 and is estimated to rise to 65 per cent in 2024 and projected to reach 67.5 per cent in 2025.
The economy is expected to grow at 6.6 per cent in 2024.