Rwanda will receive a further $111.06m from the International Monetary Fund as part of the Rapid Credit Facility (RCF) to support recovery amidst the Covid-19 pandemic.
The IMF Board on Thursday, June 11 approved the disbursement of the funds bringing the total to IMF COVID-19 support to Rwanda to $220.46 million.
In its decision to disburse the funds the Executive Board of the IMF noted that Rwanda’s economic outlook had been affected by the pandemic since the previous disbursement on April 2nd this year.
This has among other things seen a downward revision of 2020 GDP growth forecast from 5.1 to 2.0 per cent.
"The unprecedented spending needs generated by the pandemic, combined with losses of revenues, are putting significant pressures on public finances and compounding the impact of sharp declines of exports and remittances on the balance of payments. The additional disbursement under the RCF will provide much-needed support for critical COVID-related spending under the government’s Economic Recovery Plan, but further support will be needed from the international community,” the IMF said.
The financier noted that Rwandan authorities are committed to transparency and accountability to ensure the appropriate use of emergency financing, building on strong public financial management framework.
Tao Zhang, the Deputy Managing Director and Acting Chair of the board said that due to the pandemic, there had been more revenue losses and increased spending needs than was estimated at the time of the first disbursement of funds.
Zhang noted that policy measures deployed by the Rwandan government are appropriate calling on additional financing from the international community to ease the adjustment burden.
"The policy measures deployed by the authorities to respond to the pandemic and accelerate economic recovery are appropriate. The additional fiscal spending should help mitigate the impact of the pandemic while ensuring that spending is well-targeted and cost-effective so as not to crowd-out other priority areas. Additional financing from the international community remains critical to ease the adjustment burden. The authorities’ commitment to high standards of transparency and accountability in the management of emergency financial assistance is welcome,” he said.
Zhang noted the importance to maintain data-driven monetary policy and continue to provide liquidity support to cushion the impact of the pandemic as well as step-up supervision to safeguard financial stability.
The amounts will be disbursed immediately in full for the government to rollout interventions.
In April this year, Rwanda received about $11 million in debt service relief on its IMF obligations for an initial period of 6 months.
The government this week launched the EconomicRecovery Fund (ERF), a two-year facility established by the Government to accelerate the recovery of Covid-19 hit businesses.
The Fund is an intervention designed to revive business activity and safeguard employment in the wake of the Covid-19 pandemic.
According to the Ministry of Finance, the fund has started with an initial Rwf100 billion to be distributed towards the hospitality sector loan refinancing, businesses in manufacturing (including agro-processing), transport and logistics as well as small and medium enterprises linked to domestic and global supply chains.