The International Monetary Fund (IMF) Board is set to convene in December to assess Rwanda’s progress under the three-year economic reform plan. If approved, Rwanda will receive $184.9 million in new financing. The IMF approved a 36-month Policy Coordination Instrument (PCI) for Rwanda in December 2022 to support the government’s economic policies and reform agenda aimed at maintaining macroeconomic stability and promoting inclusive growth.
A recent visit by an IMF team led by Ruben Atoyan confirmed that Rwanda had met all quantitative targets under the PCI and Stand-by Credit Facility (SCF) arrangement. This positive performance is expected to unlock $95.9 million under the Resilience and Sustainability Facility (RSF) and $89 million under the SCF.
The IMF board is scheduled to review Rwanda’s progress in December, with Mr. Atoyan noting that despite challenges, the country’s macroeconomic policy performance has remained on track. The staff-level agreement has been reached on policies needed to complete the reviews of Rwanda’s PCI and programs under the RSF and SCF arrangements.
Rwanda’s commitment to implementing climate-related reforms under the RSF arrangement has been strong, with measures to enhance climate resilience and develop a green taxonomy progressing well. The country became the first African nation to access the RSF, providing long-term financing to address structural challenges like climate change.
While Rwanda’s economic outlook remains positive, risks persist, including geopolitical tensions and fluctuations in global energy and food prices. The IMF team emphasized the importance of fiscal consolidation to address the increasing public debt-to-GDP ratio, which is projected to reach 80 percent by 2025.
Increased access to concessional financing is seen as an opportunity to implement critical reforms, but domestic revenue mobilization remains essential. Accelerating the development of green projects and institutional reforms can enhance the impact of the RSF.
The Policy Coordination Instrument (PCI) serves as a non-financial tool for IMF member countries to signal commitment to reforms and access IMF resources in case of balance-of-payments needs. Rwanda’s adherence to the PCI requirements facilitates quick access to IMF resources, subject to standard policies.
In conclusion, Rwanda’s economic performance under the IMF’s reform plan is commendable, with efforts to strengthen macroeconomic stability and promote sustainable growth. The upcoming IMF board review is expected to unlock additional financing to support Rwanda’s development goals.
