IMF team highlights good performance of Rwanda’s economy

12 Novembre 2017

Kigali, Rwanda, November 12 (Infosplusgabon) - An International Monetary Fund (IMF) team has reached preliminary agreement with the government of Rwanda on policies that could support completion of eighth and third reviews of the country’s Policy Support Instrument (PSI) and Standby Credit Facility (SCF)-supported programmes.

Completing a review visit to Rwanda on Friday, the team said the agreement is subject to approval by IMF management and its Executive Board, which is due to consider the reviews in January 2018.

“The team highlighted that Rwanda’s economy continues to perform well, with strong implementation of its IMF-supported programmes,” said team leader Laure Redifer, noting that due to a combination of factors (drought, completion of large construction projects, and policy adjustment to address external imbalances), growth decelerated over the second half of 2016 and in early 2017.

According to Ms. Redifer, the team projected a gradual growth recovery during the second half of 2017, owing to good rains and expanding domestic production.

“Overall, growth in 2017 is expected to be 5.2 percent, which is still well above growth averages for sub-Saharan Africa. Growth acceleration in the medium term will lead to average growth above 7 percent over the next three years,” she observed.

After peaking in early 2017, Rwanda’s headline inflation declined to well below the National Bank of Rwanda’s 5 percent headline target as food supply constraints and depreciation pressures receded. By end year, inflation is expected to remain below 5 percent.

“Rwanda’s external trade deficit contracted over the past 18 months, following a strong improvement in exports of goods and a modest reduction in imports,” said Ms Redifer in a statement at the end of the visit.

During the two-week visit, the IMF team and government officials discussed economic policies that could that could support completion of the IMF-funded programmes.

“Recent gains in revenue mobilization have tapered off owing to the growth slowdown, tax incentives, and the implementation of the East African Community restrictions on used clothing,” Ms Redifer pointed out.

In order to reestablish a rising trend in the tax revenue ratio to GDP, the IMF mission encouraged passage of income and property tax laws as soon as possible, and analysis of the effectiveness of various tax incentives.

“The IMF-supported programmes are on track, with end-June targets met and most structural benchmarks on track. The programmes are scheduled to expire in December 2017, and the authorities are expected to request a one-year extension of the PSI-supported programme,” Ms Redifer said.

FIN/INFOSPLUSGABON/DDR/ GABON 2017

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