KIGALI - THE Central Bank (BNR) has projected that the country’s economy will grow beyond the earlier set 7 percent, depending on the current economic trends.

The new trend was attributed to the continuing strong performance in the agricultural sector and significant recovery in services and industry sectors.

The figure is also higher than 6 percent economic growth achieved last year.

Releasing its Monetary Policy and Financial Statement yesterday, BNR officials said that economic recovery during the first half of this year has been marked by good performance in all production sectors.

"Economic activities are strongly improving. The real Gross Domestic Product (GDP) growth for the first quarter of 2010 is estimated in the range of 4-7percent and the expectations for the rest of the year indicate good performance as well,” the Central Bank said in a statement. 

The agricultural sector - the backbone of the economy - also maintained momentum recording an increase of 8.2 percent compared to 2009 due to sustained implementation of crop intensification program and favourable climatic conditions. 

In addition, economic growth has also been boosted by significant improvement in banking system liquidity and regained confidence in business activities.

"Financial sector soundness has significantly improved from the liquidity crunch and tightened credits conditions experienced last year,” said François Kanimba, the Central Bank Governor.

The consolidated balance sheet of the banking industry expanded by 8.3 percent during the first half of this year compared to the same period of 2009.

Kanimba also observed that the economy has also benefited from "continuing low and quite” stable inflation rate and value of the local currency.

"We do expect low single digit inflation figure to be maintained for the rest of the year,” he said. 

Since last year, consumer prices have been on a downward trend to reach record low of 3 percent in July while the Rwandan franc has been generally stable, though it slightly depreciated in the second quarter against the American dollar.

However, the Governor voiced concerns over the mismanagement of savings and credit cooperatives that could undermine the success of government’s Umurenge SACCO Programme. 

"People have raised issues about misappropriated funds – something needs to be done. It is very important to rebuild confidence in SACCOs otherwise it will be difficult to successfully implement Umurenge SACCO.” he observed.

The Governor, called for a mobilization campaign to recover the misappropriated funds and capacity building within the micro finance institutions to improve the performance of the sector.

Umurenge SACCO aims at increasing access to financial services and boosting domestic savings.

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