IMF: Rwanda’s economic performance under Kagame remains strong with growth beating expectations

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Simon Ateba is Chief White House Correspondent for Today News Africa. Simon covers President Joe Biden, Vice President Kamala Harris, the U.S. government, the United Nations, the International Monetary Fund, the World Bank and other financial and international institutions in Washington D.C. and New York City.

The International Monetary Fund (IMF) said on Friday that Rwanda’s macroeconomic performance was strong and would remain that way over the next two to three years.

According to the IMF, the economic growth of Rwanda continues to beat expectations, averaging 10.3 percent in the first half of 2019, on the back of a booming construction sector, robust activity in services, and a healthy agricultural output.

“As a result, the 2019 growth projection has been revised up from 7.8 to 8.5 percent, with strong upside risk—especially given the recently released GDP figures suggesting that the economy grew in double digits in Q3 2019,” IMF said in a statement sent to TODAY NEWS AFRICA in Washington DC.

The global fund said the fiscal deficit in 2018/19 was higher-than-expected due to accelerated implementation of investment spending; but remained within the program limits.

“This, combined with stronger demand for the capital-goods imports needed for construction, has led to a widening of the current account deficit. Growth should remain strong, at around 8 percent, over the next 2–3 years”.

The comments on Friday came more than a week after the Executive Board of the International Monetary Fund (IMF) on January 9, 2020, concluded the first review of Rwanda’s program supported by the IMF’s Policy Consultation Instrument (PCI). The decision was taken without an Executive Board meeting.

Rwanda’s PCI-supported program was approved on June 28, 2019 to support the implementation of Rwanda’s National Strategy for Transformation (NST).

Program modalities are focused on four main pillars: (i) creating budget space for the implementation of the NST while preserving fiscal and debt sustainability; (ii) improving fiscal transparency, including the identification and management of potential government liabilities, (iii) regaining momentum on domestic revenue mobilization; and (iv) supporting the implementation of the National Bank of Rwanda (BNR)’s new interest rate-based monetary policy framework.

On the inflation in Rwanda, IMF said after a period of subdued price pressure, inflation has come back within the BNR’s and the PCI’s Monetary Policy Consultation Clause (MPCC) targeted range partly reflecting stronger domestic demand and dissipating base effects. 

BNR has appropriately set the monetary stance by reducing interest rates at the trough of the inflation cycle in May and has since refrained from further easing as price dynamics reversed.

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