The International Monetary Fund has approved a US$1.8 million loan to fund government development, a statement from the World Bank shows.

The disbursement follows the completion of the fourth review of Rwanda’s economic performance under a three-year poverty reduction arrangement.

According to Lars Engstrom IMF Resident Representative, the loan is part of the total envelope of US$12.9 million in the Poverty Reduction and Growth Facility (PRGF) arrangement that was signed in June 2006.

"In completing the review, the board granted a waiver for the non-observance of a performance criterion on net credit to the government,” a press statement reads in part.

The deviation from the target was temporary, resulting from delays in disbursement from a donor and reimbursements in relation to peacekeeping activities.

The board also approved Rwanda’s request for a modification of performance criteria for 2008.  PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5.5-year grace period on principal payments.

The fifth disbursement of US$1.8m brings the total to U$9.2m and remains with two performance reviews to empty the envelope.

The Secretary General in the Ministry of Finance and Economic Planning, John Rwangombwa, told The New Times that the loan is deposited in the Central Bank as a balance of payment for international trade issues and foreign exchange.

"What’s important is not the money but the policy to maintain macro-economic stability because that’s where even other donors base to support poverty reduction strategies,” he said.

The PRGF is the IMF’s concessional facility for low-income countries. PRGF-supported programmes are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners.

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