Press Release No. 10/505

Press Release: IMF Executive Board Completes First Review Under Policy Support Instrument for Rwanda

December 20, 2010

The Executive Board of the International Monetary Fund (IMF) today completed the first review under the three-year Policy Support Instrument (PSI) for Rwanda. The Executive Board also approved modifications of assessment criteria under the PSI.

The PSI for Rwanda was approved on June 16, 2010 (see Press Release No. 10/247) and is aimed at consolidating macroeconomic stability, achieving sustained broad-based growth, and reducing Rwanda’s aid dependency. The program focuses on maintaining a sustainable fiscal position; strengthening monetary and exchange rate policies; and supporting growth with structural reforms to diversify the export base and improving the business environment.

Following the Executive Board's discussion on Rwanda, Mr. Murilo Portugal, Deputy Managing Director and Chairman, stated:

“The Rwanda authorities are to be commended for satisfactory implementation of the economic program supported by the Policy Support Instrument for 2009/10, carried out against the backdrop of a global economic downturn. Rwanda’s economy is showing clear signs of recovery from the external and domestic shocks of the past two years. However, uncertainty in external demand, a slow pick-up in credit to the private sector, and the need to secure favorable financing to implement their investment plan to close the infrastructure gap continue to pose policy challenges.

“The authorities are gradually unwinding the fiscal stimulus while at the same time mobilizing additional domestic revenues and protecting priority spending. Monetary policy has been accommodative to rekindle credit to the private sector and further support growth. The authorities are committed to regularly assess the inflation outlook in order to safeguard the gains made in macroeconomic stability that currently underpin the economic recovery.

“The authorities are aware of the need to deepen the domestic financial markets to support the growing economy, and are implementing a program to increase access to credit through additional licensing of micro finance institutions and saving and credit companies. Given rising levels of non-performing loans, further efforts are needed to strengthen bank and non-bank supervision to ensure that higher access to credit does not endanger financial stability.”