The International Monetary Fund (IMF) on Thursday approved a second disbursement of $111.06 million to Rwanda to combat COVID-19.
The latest release of funds, under the Rapid Credit Facility (RCF), brings the total IMF COVID-19 emergency support to Rwanda to $ 220.46 million.
According to the IMF, Rwanda’s economy has been severely impacted by the COVID-19 pandemic with weaker domestic demand losses of revenue, and a sharp decline in exports and remittances.
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“The additional resources under the RCF will help alleviate pressing financing needs, including for health, social protection, and supporting the most impacted sectors and vulnerable groups,” the Fund said in a statement in Washington D.C.
It said Rwanda’s economic outlook has worsened since the approval of the first RCF request on April 2, 2020, leading to a further downward revision in the 2020 GDP growth forecast from 5.1 to 2.0 percent due to deepening of the COVID-19 impact.
The unprecedented spending needs generated by the pandemic, combined with losses of revenues, are putting significant pressures on public finances and compounding the impact of sharp declines of exports and remittances on the balance of payments, the IMF said, adding that “the additional disbursement under the RCF will provide much needed support for critical COVID-related spending under the government’s Economic Recovery Plan, but further support will be needed from the international community.”
Mr. Tao Zhang, an IMF Deputy Managing Director and Acting Chair, said “the COVID-19 pandemic continues to severely impact the Rwandan economy.”
“The global and domestic macroeconomic outlook has further deteriorated. Growth projections have been revised down, and revenue losses and spending needs are more than twice the size estimated at the time of the first RCF request.”
Mr. Zhang praised Rwanda’s authorities for an ‘appropriate’ response to the pandemic
“Once the crisis abates, it will be critical to adopt a credible fiscal adjustment path to maintain debt sustainability in the medium-term and preserve Rwanda’s development gains over the last two decades,” he added.