Chief Economist Department

Chief Economist Department is made by three directorates:

  • Macroeconomic Policy Directorate 
  • Tax Policy Directorate
  • Debt Directorate 

1. Macroeconomic Policy Directorate General

Purpose of the function

Formulation and monitoring of macroeconomic policies and programs, including issues relating to analysis and projections of the four core macroeconomic sectors, real sector, fiscal sector, monetary sector, and external sector. The Macroeconomic framework is a consistent set of overall economic policies and objectives defined in the National Strategy for Transformation (NST1) and in the Vision 2050.

Economic Surveillance and Modeling

The Macroeconomic Policy Directorate identifies suitable models for economic optimization and surveillance systems mechanism that aims to prevent and correct macroeconomic imbalances.

Description of the function

The function revolves around the four sectors of the economy: the real sector, the fiscal sector, the monetary and financial sector, and the external sector. Tracking Rwanda economic developments and providing policy advice on macroeconomic issues through policy analysis and the production of macroeconomic forecasts. Facilitating the economic surveillance of Rwanda carried out by the International Monetary Fund (IMF). Advise the Ministry on the economic prospects and the economic implications of policies and programs; promoting regional growth and development.

Real sector

The real sector deals with the total output (composed by agriculture, industry and services sectors), the Consumer Price Index (CPI) and the Producer Price Index (PPI). The real sector attempts to explain changes in these aggregates and to guide policymakers in their pursuit of economic objectives and efforts to respond to unanticipated changes in the economic environment. Both the analysis of events and the design of appropriate policies require accurate economic information and statistics that are made available in a systematic and timely fashion. GDP projections are discussed with NISR and BNR for accuracy and consistency.

Fiscal sector (fiscal policy)

The role of macroeconomic directorate is to analyze the implications of public expenditure as public expenditure affects both aggregate supply (or Production) and aggregate demand (or Spending). All this analysis helps government to provide with an appropriate Tax policy or public spending orientation and a better budget allocation among sectors or government institutions.

The government transactions are compiled in consolidated tables called “Government operations Table” following Government Statistics Standard Format (GFS) on a cash basis. Receipts and payments recorded on a cash basis are documented as of the time of monetary settlement. Recording government transactions on a cash basis provides analysts with a basis for comparison with the monetary accounts and thus makes measuring the impact of government operations on the monetary aggregates easier. Government operations table describes the fiscal program and policy in a short run (3 years) and it is revised every fiscal year along with the update of the macroeconomic framework and during the budget process.

Monetary and financial sector

The macroeconomic policy direction only provides inputs to monetary policy pertaining to fiscal policy. Monetary policy is exclusively under the control of the central bank (BNR).

External sector

The external sector has to do with the balance of payments. The Balance of payment is produced by the National Bank of Rwanda which is also the main source for BOP data. BOP projections are used to inform the tree other sectors in the framework (the fiscal sector, the real sector and the monetary sector). The macro policy directorate liaises with the statistical department in National Bank of Rwanda, line ministries and with Rwanda Mining Board, in order to ensure that required BOP data are available for the ongoing economic assessments and reports in a timely manner.

Outputs of the Directorate:
  • Macroeconomic framework (in collaboration with BNR);
  • Negotiation with IMF under the agreed program designed to promote a close policy dialogue between the IMF and the Country;
  • Macroeconomic chapter of the Fiscal Risk Statement;
  • Economic chapter of the budget documents and the updates;
  • Economic chapter of national strategic documents: Vision 2050, NST1;
  • Different analysis and research on the economic situation and outlook (Annual   Economic Report, Monthly Economic Performance briefs, Economic analysis etc.).

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2. Tax Policy Directorate General 

The Tax Policy Directorate General is responsible for advising the Minister of Finance and Economic Planning on tax policy issues.

Main roles of the Directorate in this area are:

  • Formulate tax policies to achieve economic policy objectives and evaluate its impact on both tax payer and the economy;
  • Identify new areas of widening the tax base and raise domestic revenues to finance government budget;
  • Guide general tax reform;
  • Responding to requests and tax claims addressed to MINECOFIN;
  • Study and advice on the effect of tax policy measures on individuals, business and economy;
  • Prepare annual and medium term revenue forecasts;
  • Prepare quarterly and annual revenue performance reports;
  • Prepare regional and international tax exchange and tax related treaty negotiations.

Purpose of the function

The Directorate develops and evaluates tax policies and legislation, monitors tariff policies and those of EAC, and proposes new policies that will best serve the economy. In that process Tax Policy Directorate also makes sure that incentives and exemptions are granted in conformity with the national laws and international conventions.

The directorate analyze domestic tax legislation vis-a-vis to international best practices and propose changes to strengthen Rwanda’s tax system in line with international standards, so as to foster cross-border trade, investment, capital and technology flows, while minimizing revenue losses from profit shifting and base erosion.

Description of the function

The Directorate analyses the impact of current and new tax laws and prepares explanatory statements. The directorate consults with different stakeholders on tax issues, enabling public input on policy options.

All the tax policy related issues are submitted to the Tax Policy Committee (TPC) for consideration, analysis and inform decision-making taking into account distortions, income distribution and revenue effects of the tax system.  The TPC is chaired by the Chief Economist whereas the Tax Policy Expert in Tax Policy Directorate acts as Secretary of the committee. This committee comprises of representatives from different institutions including among others: Ministry of Finance and Economic Planning, Rwanda Revenue Authority, Ministry of Trade and Industry, Ministry of Justice, Rwanda Development Board, Private Sector Federation. In addition, any other institution may be invited to the TPC meetings depending on its expertise in the issue to be handled.

The committee normally meets on quarterly basis. However, it may meet anytime when it is deemed necessary. The Ministry of Finance and Economic Planning through the Tax Policy Directorate organizes and facilitates the meetings of the committee and follows up implementation of the recommendations.

The directorate advise the Minister on Rwanda’s compliance with internationally agreed standards, its participation in international tax forums, and its interagency tax treaty negotiations. This is done by establishing different committees and treaty negotiation team.

Outputs of the Directorate:
  • Tax policy reforms (initiate tax policies and law to achieve economic policy objectives and raise domestic revenues to finance government budget, handle negotiations of Double Taxation Agreements etc.)
  • Tax Expenditure Report in collaboration with RRA
  • Short-term and Medium-term revenue forecast.

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3. Debt Directorate General 

The Prime Minister’s Order No 001/03 of 11/01/2021 Determining Mission, Responsibilities and Organizational Structure of the Ministry of Finance and Economic Planning, elevated the Debt Management Unit to the Debt Directorate General and placed together with Macro-Economic Policy Directorate General and Tax Policy Directorate General under the Office of the Chief Economist.

Debt is a potential financing option to meet the financial requirements of its national investments plans. It includes among others loans, debt securities, accounts payables and other debt instruments. Therefore, Debt Directorate General intervenes in debt management operations through designing and updating clear debt strategy and policies in line with the country’s vision.

Key Debt Directorate General Activities:

  • Analyze projections of funding needs,
  • Provide guarantees and other securities to SOE’s willing to borrow,
  • Perform a debt Sustainability Analysis,
  • Design and formulate a Medium Term Debt Strategy (MTDS),
  • Design Annual borrowing plan consistent with approved Medium Term Debt Strategy (MTDS),
  • Run Cost benefit analysis for funding needs requests;
  •  Publish Debt Statistical Bulletin;
  • Perform regular Debt Recording, Debt Payment and Validation, Debt Service Forecasting, Debt reporting to both local and foreign stakeholders.

Description of Key functions

1. Medium Term Debt strategy (MTDS).

The Medium Term Debt Management Strategy (MTDS) is a plan that guides the Government’s borrowing to achieve a desired composition of the government debt portfolio. The Strategy focuses on managing the risk exposure embedded in the debt portfolio, particularly the potential variations in the cost of debt servicing and its impact on the budget and the size of the debt.

Debt Directorate General Design and formulate a Medium Term Debt Strategy and policy at the start of each Fiscal Year that is set within the context of the government’s fiscal policy and budget strategy.

2. Debt Sustainability Analysis (DSA).

Debt Sustainability Analysis (DSA) is conducted to analyze the debt portfolio by multiple indicators or ratios and assessing debt vulnerabilities that guides borrowing and lending decisions. This analysis supports efforts of the country to achieve development goals, while minimizing the risk of experiencing debt distress. Debt Directorate General conduct DSA using the joint IMF-World Bank Debt Sustainability Framework for Low-Income Countries (LIC DSF).

3. Design Annual borrowing plan consistent with approved MTDS.

An annual borrowing or financing plan, that is formulated in line with the approved MTDS, sets out guidelines for external and domestic borrowing including a domestic issuance program and auction calendar considering:

  • Maturity profile of existing portfolio both external and domestic;
  • Annual gross domestic financing need and liquidity condition;
  • Borrowing Instruments in line with the approved MTDS.

4. Evaluation, and negotiation, of contracting of new loans.

The Debt Directorate General perform the cost benefit analysis for any contracting new loan under negotiation to assess the real effective rate of loan and projected debt service for the loan by considering:

  • Terms of the project loan ( interest rate, grace period and maturity);
  • Additional projects costs such management fee, commitment fee etc;
  • Exchange rate fluctuation (appreciation or depreciation);
  • Interest rate fluctuation for instruments with variable rates.

5. Compilation and Dissemination of Public Sector Debt Statistics.

The Debt Directorate General Compile and disseminate public debt data to both Domestic (Macro-Economic Policy Directorate General, Budget Department, Planning Department, Accountant General’s Office, Central Bank) and External Stakeholders such as IMF, World Bank, AFDB, EAC, rating agencies and others; for improving transparency, accountability and facilitate better decision making.

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