Press Release No. 15/245

Press Release: IMF Executive Board Completes Third PSI Review for Rwanda

May 29, 2015

The Executive Board of the International Monetary Fund (IMF) on May 29, 2015 completed the third review of Rwanda’s economic performance under a three-year program supported by the IMF’s Policy Support Instrument (PSI)¹. The decision was taken without an Executive Board meeting².

The PSI for Rwanda was approved on December 2, 2013 (see Press Release No.13/483).

Rwanda’s performance under the PSI has been satisfactory. The authorities are to be commended for meeting all quantitative assessment criteria. The performance on indicative targets and structural benchmarks was uneven and it will be important to maintain the momentum of reforms, including on revenue mobilization while strengthening project implementation.

Growth in 2015 is expected to remain strong, while the outlook is stable. The cautious fiscal stance and monetary policy are consistent with the need to preserve policy buffers.

The framework for the FY2015/16 budget is in line with PSI objectives. The budget prioritizes the public investment program in line with available resources, includes measures to improve domestic revenue mobilization, protects priority spending, and limits the crowding out of credit to the private sector. Recent efforts to adopt the electronic billing machines is yet to gain full traction and the agenda on agricultural and property taxation has yet to be carried out.

Rwanda’s infrastructure investment needs remain significant. The authorities have stepped up their efforts to strengthen project selection and prioritization to maintain debt sustainability.

The current monetary policy stance remains appropriate. The economy has been operating in a low inflationary environment, an amply liquid banking system, and ample credit to the private sector. Efforts to improve the regulatory framework have been advancing satisfactorily and the consolidation of the SACCOs into one cooperative will further improve the supervisory oversight.

¹ The PSI is an instrument of the IMF designed for low-income countries that do not need or may not want balance of payments financial support. The PSI helps countries design effective economic programs that once approved by the IMF's Executive Board, signal to donors, multilateral development banks, and markets the Fund's endorsement of a member's policies (see http://www.imf.org/external/np/exr/facts/psi.htm). Details on Rwanda’s current PSI are available at www.imf.org/rwanda.

² The Executive Board takes decisions under its lapse of time procedure when it is agreed by the Board that a proposal can be considered without convening formal discussions.