The International Monetary Fund has confirmed that Rwanda’s economy is projected to grow by 5.1 per cent in 2021 following a contraction of 3.4 per cent in 2020.

This was after the Executive Board of the Fund (IMF) completed their Fourth Review under the Policy Coordination Instrument (PCI) for Rwanda.

The IMF observed that despite the second wave of infections that prompted a three-week lockdown in Kigali in early 2021, real GDP is projected to rebound by 5.1 percent in 2021.

This is buoyed by scaled-up government spending to accommodate additional spending needs due to the more protracted nature of the pandemic and the need to minimize scarring.

It will however require more time, up to 2023, for growth to return to its pre-pandemic.

"The authorities’ policy response has remained well-designed and targeted. It aims at swiftly procuring and securing financing for vaccines, increasing fiscal support for households and businesses, and providing sufficient liquidity to the banking system given the protracted nature of the pandemic and the need to minimize any lasting socio-economic impact,”

"To accommodate additional spending needs, the authorities have appropriately relaxed the fiscal program targets, while enhancing their efforts to contain fiscal risks to safeguard debt sustainability and adopting a gradual fiscal consolidation as soon as the crisis abates,” the IMF observed.

Among the key underlying risks observed include uncertainties surrounding the availability and timely delivery of vaccines.

Containing financial sector vulnerabilities, the IMF noted, will be key to safeguarding financial stability as well as intensified monitoring of credit risk, prudent restructuring, and timely recognition of problem loans.

"The central bank should continue keeping monetary policy data driven and monitoring price developments amid the uncertain outlook. The authorities should keep the momentum with structural reforms for an inclusive recovery, especially to limit the impact of the pandemic on women and children, and to make progress on the Sustainable Development Goals,” the financier noted.

The economy grew by 3.5 per cent in the first quarter of 2021 buoyed by manufacturing and industry sectors.

Among the sectors that exhibited growth in the first quarter include industrial activities and agriculture sector.