Rwanda economy to grow 8.5 percent by end of 2008 - IMF

After a devastating genocide in 1994 that wrecked the economy, the country estimated to have a population of about 9 million people has stabilised, developed its coffee and Information Communication Technology (ICT) sectors fast, and attracted foreign investors. KIGALI -The International Monetary Fund (IMF) expects Rwanda’s economy to grow 8.5 percent this year but dip to 6 percent in 2009 on high inflation and a global economic slowdown, its representative in Kigali said on Thursday. After a devastating genocide in 1994 that wrecked the economy, the country estimated to have a population of about 9 million people has stabilised, developed its coffee and Information Communication Technology (ICT) sectors fast, and attracted foreign investors. “In Rwanda this year, we’re expecting 8.5 percent growth and next year 6 percent,” IMF country head Lars Engstrom told Reuters in an interview. “We think there will be effects from the global financial crisis.” The government has projected 7-8 percent growth for 2009 and 7 percent this year. The IMF representative said 2008 growth would be based on strong performances in agriculture, construction and services. Next year, Rwanda will move its financial year to July-June from January-December to align with other east African countries.president Paul Kagame is widely credited with restoring order and achieving healthy growth in Rwanda. Engstrom said Rwanda’s currency could weather pressures that have hit Kenyan and Ugandan units as offshore players pull out dollars from those markets to cover positions at home. Rwanda could feel a pinch on its imports and exports, which are mostly trucked in through Uganda from Kenya’s Mombasa port. “Because Rwanda has not liberalised capital movements fully, the effects of the financial crises and the global economic slowdown should affect Rwanda more gradually through the real economy, that is, the export and import of goods and services,” he said. “Remittances from abroad and foreign direct investment could also decline,” he said. Like many east African countries, Rwanda has faced a duel onslaught this year from high commodity and energy prices that have boosted inflation and put a strain on balance of payments. Rwanda’s annual headline inflation rate hit 20.87 percent in September from a year-low of 6.3 percent in February, according to the National Institute of Statistics of Rwanda. “The ambition of the government is to return to single-digit inflation by the end of 2009, and we think this can be achieved,” Engstrom said. Reuters