MPs approve relevance of bill reforming central bank operations

The Chamber of Deputies on Thursday, February 12, approved the relevance of a new bill seeking to reform operations of the National Bank of Rwanda (BNR), in a move aimed at strengthening the Central Bank’s independence and aligning it with international standards. The relevance of the bill was approved by 68 lawmakers out of the 69 present, with one abstention. ALSO READ: Central bank explains new changes in foreign currency use Tabling the bill, the Minister of Finance and Economic Planning Yusuf Murangwa said a 2024 assessment conducted by the Government of Rwanda in partnership with the International Monetary Fund (IMF) revealed gaps in the existing law governing the central bank. “While the current law has served the country well, the assessment showed areas that required improvement to match modern central banking standards and international best practices,” Murangwa told lawmakers. ALSO READ: Govt moves to revamp operations of central bank to spur efficiency Key changes introduced One of the major reforms concerns the recapitalisation mechanism of the central bank. Murangwa said the existing law does not provide a clear framework for recapitalising BNR in the event of capital erosion, a gap the new bill seeks to address. The bill also strengthens legal protections for BNR leaders, staff and members of decision-making organs, ensuring they are not interfered with while exercising their official duties. According to the minister, the current law does not sufficiently guarantee this operational independence. ALSO READ: Soraya Hakuziyaremye appointed new central bank governor Another key reform limits the delegation of powers by the BNR Board. While the existing law allows the Board to delegate some supervisory powers to the Governor, the new bill clearly defines the boundaries of such delegation to preserve the Board’s oversight role. The legislation further introduces a three-month deadline for appealing BNR decisions, a move intended to prevent appeals from being filed indefinitely. In addition, the bill raises the qualifications required for Board members and adjusts the number of members to ensure a broader mix of skills and expertise. It also sets clear timelines for appointing the Governor, Deputy Governor and Board members. While the current law provides for their appointment by presidential order and outlines grounds for removal, it does not specify deadlines for filling vacancies. To enhance the central bank’s independence, the bill limits the number of public servants on the Board to 30 per cent, excluding the Governor, Deputy Governor and one member drawn from higher education or research institutions. The proposed law further makes the establishment of a Board audit committee mandatory, a requirement absent in the current legal framework. Another reform strengthens the Monetary Policy Committee and the Financial Stability Committee by making the inclusion of non-BNR members mandatory in both bodies, a move aimed at reinforcing their independence and effectiveness. The bill also clarifies BNR’s role in protecting the Rwandan franc, while reaffirming that the authority to establish the national currency remains vested in the President, as stipulated by the Constitution. Additionally, it expands BNR’s mandate to protect not only foreign currency but also other financial assets of monetary value, reflecting the growing complexity of Rwanda’s financial sector. Lawmakers’ concerns MP Germaine Mukabalisa questioned the rationale behind introducing deadlines for presidential appointments, asking whether previous delays had prompted the change. She also sought clarification on whether reducing the number of public servants on the Board was meant to address concerns over limited institutional independence. Responding, Murangwa said the reforms were not prompted by past failures but were meant to strengthen governance going forward. “These changes are forward-looking. They are designed to prevent potential challenges and ensure strong institutional governance in the future,” he said.

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MPs approve relevance of bill reforming central bank operations