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The officials of the International Monetary Fund, IMF, have ended their mission in Rwanda October 7, projecting a favourable economic performance of 6 percent growth for the country in 2014
| By Maureen Chigbo | Oct. 20, 2014 @ 01:00 GMT |
THE economy of Rwanda is growing stronger if the report of an International Monetary Fund, IMF, mission to the country is anything to go by. Paulo Drummond, who led the IMF team visited Kigali from September 22 to October 7 to conduct the 2014 Article IV Consultation and the second review of the economic program supported by the Policy Support Instrument, PSI.
Drummond, at the end of the mission said: “Rwanda’s recent economic performance has been favorable. Growth in the first half of 2014 rebounded to 6.8 percent. Agriculture output also recovered due to favorable climate conditions. The pick-up in growth was broad-based, including construction, real estate, and services. Consumer price inflation remained low at below 1 percent at end-August, driven by low import and food prices.”
According to him, “The main objectives of the 2014/15 budget remain within reach: greater revenue mobilisation, targeting an increase of 1 percentage point in the tax revenue ratio to 16 percent of Gross Domestic Product, GDP; containing current spending while protecting priority spending; and limiting domestic financing to avoid crowding out the private sector.” He added that aid flows into the country have increased, but donor disbursements are expected to be about 1 percent of GDP lower relative to the 2014/15 budget. The mission welcomes the decision by the authorities to respond and keep the overall budget in line with available resources.
Drummond said: “Policy performance under the IMF-supported programme remains satisfactory. All quantitative indicators for end-June 2014 were met. The fiscal position through end-June 2014 was broadly in line with PSI objectives, except for slightly less than anticipated revenue collection; the monetary programme was on target; and structural reforms advanced broadly as planned.”
“Looking ahead, he said, economic growth is projected at 6 percent in 2014, and end-year inflation is expected to be 3.2 percent. International reserves are targeted to remain at about 4 months of imports.
“The authorities and the mission discussed economic policies and reforms to maintain economic stability and manage a successful transition from a public sector-led, aid-dependent economy to a more private sector-led economy in the medium term. Key to sustaining high growth will be the implementation of the authorities’ strategy to further reduce the cost of doing business and remove impediments to private sector development. In this regard, the mission welcomes the government’s intention to improve project implementation, including through increased oversight, and prepare a targeted public investment plan for infrastructure projects in priority areas, such as water, energy, and transport.”
The mission also welcomes the authorities’ plan to explore all concessional financing options, private sector participation, including through public private partnership, PPP, before considering non-concessional resources.
The IMF mission met with Ambassador Claver Gatete, minister of finance and economic planning, John Rwangombwa, governor of the National Bank of Rwanda as well as with other senior government officials, development partners, and representatives of the business community and civil society.
He said that: “Subject to management approval, the IMF’s Executive Board is expected to consider the second PSI review and the Article IV Consultation in December 2014.”
The PSI is an instrument of the IMF designed for countries that do not need balance of payments financial support. The PSI helps countries design effective economic programs that, once approved by the IMF’s Executive Board, signal to donors, multilateral development banks, and markets the Fund’s endorsement of a member’s policies.
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