Press Release No. 24/176

IMF Executive Board Concludes Reviews of Rwanda’s Policy Coordination Instrument and Arrangement under the Resilience and Sustainability Facility, and the Stand-by Credit Facility Arrangement

May 22, 2024

• The IMF Executive Board today concluded the third reviews under the Policy Coordination Instrument and the arrangement under the Resilience and Sustainability Facility, and the first review under the Standby Credit Facility (SCF) arrangement. This allows for an immediate disbursement of about US$ 76.2 million (SDR 57.5 million) under the RSF and US$ 88.4 million (SDR 66.75 million) under the SCF.
• Despite challenging external conditions and ongoing fiscal consolidation, Rwanda's economy maintains robust growth. Going forward, the policy mix should prioritize macroeconomic and financial stability, fiscal sustainability, and the restoration of buffers.
• Program performance under the PCI/SCF has been strong, with successful implementation of reforms on social safety nets and spending rationalization. Progress on the climate agenda under the RSF also remains strong, bolstering Rwanda's resilience to climate shocks.

 Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded the third reviews under the Policy Coordination Instrument (PCI) and the arrangement Under the Resilience and Sustainability Facility (RSF), and first review under the Standby Credit Facility (SCF) arrangement with Rwanda.[1] The Executive Board’s decisions were taken without a meeting.[2] With this review, about US$ 76.2 million (SDR 57.5 million) under the RSF and US$ 88.4 million (SDR 66.75 million) under the SCF become available.

Despite challenging external conditions , Rwanda's economy maintains robust growth. Real GDP growth surpassed expectations in 2023 at 8.2 percent, with services, construction, and post-flood recovery in food crop production key contributors. While fiscal consolidation may temporarily dampen growth, a rebound to 7.3 percent is anticipated in the medium term. Inflation has declined steadily since January 2023 to 4.2 percent in March, thanks to a slowdown in food prices and core inflation. The current account deficit widened more than expected in 2023, but international reserves remain adequate at about 4.1 months of imports at end-2023.

Going forward, the policy mix should prioritize macroeconomic and financial stability, fiscal sustainability, and the restoration of buffers. A carefully planned fiscal stance is needed to mitigate the impact of the 2023 floods while maintaining a credible and balanced fiscal consolidation over the medium term. Monetary policy should target inflation within the desired range, while maintaining exchange rate flexibility to manage external shocks. Furthermore, vigilant oversight of financial stability risks, particularly concerning large exposures and rapid credit growth, is important.

Program performance remains strong. Under the PCI/SCF, all quantitative targets were met, and reforms on the social safety net and spending rationalization were implemented. RSF measures to implement climate budget tagging, integrate climate risks into fiscal planning, and strengthen disaster risk management were also implemented, contributing to Rwanda’s resilience to climate shocks and positioning the country as a leader in regional climate initiatives.