The National Bank of Rwanda (NBR) has said that outstanding credit to private sector fell by 1.8 percent as a consequence of the liquidity problem experienced by the banking system between the last quarter 2008 and the second quarter 2009.

The outstanding credit to private sector was on a declining trend during the first quarter of 2009, as it declined successively by 0.5 percent, 3.3 percent and 1.2 percent respectively.

On the other hand, from the last quarter of 2009, particularly in November to December, the credit to private sector has been increasing, officials said on Friday.

For example, between September and December of 2009, the outstanding credit to private sector increased by 2.65 percent following the regained confidence in the banking system.

This was stimulated by different measures taken by BNR and the government, which include the reduction of reserve requirements, the introduction of BNR refinancing facility against collaterals as well as the government long term deposit facilities.

Governor of NBR said on Friday while presenting the ‘Monetary Policy and Financial Stability Statement’ that, "regulation on liquidity ratio, capital adequacy requirements and regulation on accreditation and other requirements and regulation on accreditation and other requirements for external auditors of banks have been issued to all banks.”

”The soundness indicators of the banking system and micro finance sector remained strong in 2009. All banks are now compliant with the minimum capital required for Rwf 5 billion,” he added.

Also according to the policy statement the capital adequacy ratio increased to 19.4 percent against 15.9 percent in December 2008 and the Non-Performing Loans (NPL) stood at 12.8 percent from 12.6 percent in 2008.

With regards to the micro-finance sector, total assets increased by 20 percent and equity by 28.8 percent. The statement also said that gross loans and deposits increased by 16.4 percent and 18.8 percent respectively.

However the improvement in credit markets is reflected in the significant increase of new authorized loans to the economy by commercial banks since the third quarter of this year.

The new authorized loans increased by 26.4 percent and 47.2 percent during the last quarters of 2009 respectively and reached at Rwf 60.5 billion in last quarter.

Contrary to the previous years, the banking system has experienced tight liquidity conditions since the last quarter of 2008.

Two liquidity facilities have been but in place: the 3 to 12 months BNR refinancing facility and the 5-year-Government long term deposit facility. Additionally, a master swap agreement between BNR and International Finance Corporation has been signed.

The National Bank of Rwanda (NBR) implemented its Monetary Policy last year in unprecedented turmoil of the international and national economic and financial environment.

What the policy statement says

Economy

• In 2009 Rwandan economy was affected by unfavourable international economic environment
• Industry and services underperformed due to fall in global demand and tightened banking
system credit conditions 

Inflation

• oil prices on the global market will influence inflation figures
• low inflation in 2009, because of good performance in food production, a decline in import prices and a stable Rwf against the dollar

Exports

• Coffee exports performed poorly falling by 20.75 percent in 2009
• Tea performed better with international prices increasing from an average 2.27 $/Kg to 2.58 $/Kg

Exchange rates

• After some volatility during the first half of 2009, Rwanda Franc has recovered its stability against the dollar since July
• Volume of BNR forex sales to commercial banks dramatically declined in 2009

Capital Markets

•New listings have increased on the over the counter market following privatisation of government shares in some enterprises

EAC Monetary Union

•Central Bank is committed to all activities related to the establishment of a regional Monetary Union.

Ends