October 31, 2023 - 

Today, Rwanda government officials and the International Monetary Fund (IMF) mission team have reached a staff-level agreement on successful implementation of the economic and financial policies that were required to complete the second reviews under both the Policy Coordination instrument (PCI) and the Resilience and Sustainability Facility (RSF). The mission team and government officials also reached an understanding on economic policies that will be supported under a new 14-month Stand-by Credit Facility (SCF) with total access of about US$ 262 million to help mitigate the balance of payment pressures arising from climate-related shocks.

In a statement released today, the IMF mission team noted that Rwanda coped with overlapping recent shocks well, but external and domestic imbalances have intensified. Economic growth remained robust at 6.3 percent in the second quarter of 2023, notwithstanding repeated droughts and the severe floods in May 2023.

Speaking at the conclusion of the Mission, Mr. Ruben Atoyan, the IMF Mission lead said: “Despite the challenging environment, macroeconomic policy performance through end-June 2023 remained broadly in line with program objectives under the PCI. Most quantitative targets were met, and reforms to boost domestic revenue mobilization, advance expenditure rationalization, enhance fiscal transparency, and strengthen foreign exchange market functioning are progressing well.”

The mission pointed out that going forward, increasing imbalances require further recalibration of policies to safeguard macroeconomic and external sustainability. Continued fiscal consolidation, proactive and data-driven monetary policy, and further exchange rate adjustment are necessary to rebuild buffers, curb inflation, and improve debt sustainability. It urged implementation tax reforms to broaden the domestic tax base and improve tax compliance are critical for achieving Rwanda’s revenue objectives. The mission further called for enhanced efficiency of public investments, better targeting of subsidies and transfers, and digital delivery of public services.

The team commended strong progress on the climate agenda under the RSF. It noted that reforms under the RSF will improve transparency and efficiency of allocation of climate-related public spending and create a conducive environment for attracting climate finance. To further demonstrate the unwavering commitment to the RSF-supported climate agenda and to fully capitalize on the catalytic effect of the RSF, Rwanda is accelerating the implementation of the originally agreed reform measures to enhance the reform agenda by introducing new measures, including the implementation of an internationally recognized green taxonomy.

This agreement, which is subject to approval by the IMF Executive Board in December 2023, will allow Rwanda to access about US$ 48.5 million under the RSF and US$ 87.5 million under the SCF.

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