IMF tips Rwanda on growth

Prioritising investment projects while extending tax incentives to investors will not only spur economic growth but also attract more foreign investments into the country, Paulo Drummond, International Monetary Fund (IMF) mission chief, has said. The call follows a decline in the annual economic growth rate of 4.6 per cent during 2013, according to the National Institute of Statistics of Rwanda. “The country’s economic growth has been impressive when compared to other developing economies in the region. This is largely because the government has sustainably continued to pursue very prudent macro-economic policies, while creating a conducive business environment,” Drummond said. He was speaking during a dialogue on Rwanda’s New Policy Support Instrument (PSI) hosted by the IMF in Kigali yesterday. Dr Mitra Farahbaksh, Rwanda’s IMF representative, said the country achieved most of its set economic objectives as was set by IMF through its policy support instrument strategy during the first phase of PSI. “The target to maintain economic stability was fully achieved between 2010 and 2013 despite reduced donor support in 2012. We have also witnessed a reduction in poverty levels, by about 12 per cent, while inflation has been kept at below 5 per cent,” Farahbaksh said. She pledged IMF’s continued support to the country’s economic objectives as prescribed in the Second Economic Development and Poverty Reduction Strategy (EDPRS 2). “The idea of coming up with a new policy support instrument programme is to try and align our support with the EDPRS2 strategy so as to drive home the country’s economic objectives through good managerial decisions and rendering technical assistance to the country,” Farahbaksh said. She said that almost 20 per cent of IMF’s financial assistance went into technical assistance with a focus on macro-economic stability. Pichette Kampeta Sayinzoga, the Ministry of Finance Permanent Secretary, said government is taking a more balanced approach to not only attract foreign direct investments but also increase revenues. “We are confident that the integration of all EDPRS2 programmes will lead to a rebound in economic growth,” Sayinzoga said. Experts advice Mark Priestly, Trade Mark East Africa Country Director for Rwanda, said there is need to factor in regional markets to attract foreign investors in the country and encourage export diversification to attain rapid economic growth. “You have to keep the cost of doing business down and ensure that your investors do not suffer unfair competition which might emanate from the application of the 25 per cent common external tariffs,” Priestly said. The CEO of the Private Sector Federation, Hannington Namara, said the federation will engage the authorities to continue creating an enabling business environment for the private sector. “We are talking of having tax incentives while widening the country’s tax base. We are very certain that the government will continue supporting the sector so that it delivers as expected,” Namara said.