Rwanda is set to benefit from a $42.76 million debt service relief from the International Monetary Fund (IMF) for an initial period of six months, the Fund said in a statement.

The development follows the fund’s approval for a third tranche of grants for debt service relief, for 28 member countries, under the Catastrophe Containment and Relief Trust (CCRT).

This is the third debt service relief to Rwanda by IMF. It is part of the Fund’s efforts to pause collection of debts from a number of countries to help them deal with the impact of the Covid-19 pandemic.

Two prior tranches were approved on April and October 2020.

"This tranche of grants for debt service relief will continue to help free up scarce financial resources for vital emergency health, social, and economic support to mitigate the impact of the Covid-19 pandemic,” the statement reads in part.

By not servicing its debt obligation for several months, Rwanda will have more capital available to invest in affected sectors of the economy as well as improve capacity to respond to the pandemic.

Among the 28 countries that were picked to benefit from the debt relief programme include Tanzania, Burundi and Ethiopia among others.

"Covid-19 continues to have a severe impact on Rwanda. Weak global demand, supply chain disruptions and a strict economic lockdown affected all sectors of the economy,” the statement added, "And its fiscal and external financing needs rose to 5.1 and 4 per cent of GDP, respectively in the 2020/21 financial year.”

"More than half of these financing gaps have since been filled by the two Rapid Credit Facility (RCF) disbursements and concessional financing from development partners,” it said.

In March 2020, IMF managing director Kristalina Georgieva launched an urgent fundraising effort to raise $1.4 billion in grants for the CCRT. This would enable the CCRT to provide financial assistance for relief on debt service for up to a maximum of two years, while leaving the CCRT adequately funded for future needs.

So far, the fund said that donors, including from the European Union, the UK, Japan, Germany, France, the Netherlands, Switzerland, Norway, Singapore, China, Mexico, Philippines, Sweden, Bulgaria, Luxembourg, and Malt have pledged $774 million in contributions.