The technical team of the International Monetary Fund (IMF) and Rwanda have agreed on a new program that will involve semi annual assessments of Rwanda’s economic and financial policies by the Fund to be used by both donors and the public.
The programme referred to as Policy Support Instrument (PSI) now awaits approval by the IMF Board and government .
“Putting the PSI in place is an achievement for the country .To put things into perspective, Rwanda will be only seventh country to have PSI; there were no new PSI countries since late 2007,” Dmitry Gershenson the IMF Resident Representative told Business Times on Tuesday.
The first countries under the programme were: Nigeria, Uganda, Cape Verde, Tanzania, Mozambique and Senegal.
It focuses on fiscal sustainability—raising additional revenues in order to reduce aid dependency, price stability and structural reforms to deepen the financial sector, diversify exports and improve the business environment.
According to Gershenson, PSI is also designed for countries that have demonstrated commitment to macroeconomic stability and do not need financial assistance from the IMF.
“Rwanda will be the first country to get a PSI since the onset of the global financial crisis, and this is a reflection of the prudent macro economic policies before and during the crisis,” he said.
During the program reviews must be conducted on a fixed schedule every six months.
Commenting on the program, Francois Kanimba, Governor National Bank of Rwanda (BNR) said the approval of program will be a vote of confidence on how the Rwandan economy is being managed.
“Countries which negotiate PSI are countries which have shown maturity in managing the economy,” Kanimba said.
The programme follows the end of the IMF three year arrangement under the Poverty Reduction and Growth Facility (PRGF) in 2009.
In its August 2009 country report at the end of the programme, the IMF team observed that the program performance was broadly satisfactory.
With the new program, the Governor observed that it will help government to sustain credibility from international development partners that support the country financially.
“Rwanda still needs a lot of support from the international donor community to support its development agenda. When the IMF is here it is much easier.” Kanimba said.