Prime Minister Justin Nsengiyumva has said increasing people’s incomes without a corresponding rise in the production of goods and services would not provide a lasting solution to the rising cost of living. ALSO READ: Energy, transport prices push inflation to 14.5% He made the remarks on Friday, October 2, while presenting to both chambers of Parliament an assessment of the government’s efforts to develop Rwanda’s financial sector. He was responding to concerns from MPs about the impact of rising prices on households whose incomes have not increased at the same pace. ALSO READ: Inflation increases by 12.9 per cent in May “Simply increasing people’s income while the production of commodities does not increase is not a solution,” he said. He said the government’s focus is therefore also on increasing production, warning that simply injecting more money into the economy without addressing production could eventually contribute to a severe loss of purchasing power. ALSO READ: Inflation rose 9.2% in February - NISR “That is not where we want to end up,” he said, referring to countries where very large amounts of currency are needed to purchase basic goods. Why the franc is not being fixed Nsengiyumva also addressed concerns about the depreciation of the Rwandan franc against major currencies, saying artificially fixing its value could put pressure on the country’s foreign exchange reserves. “If you fix it without reflecting the reality on the market, you could just use the reserves we have to fix it,” he said. He said Rwanda currently has foreign exchange reserves equivalent to about four months of imports, which the government considers an important buffer against external shocks. Using those reserves to maintain an exchange rate that does not reflect market conditions could eventually deplete them, he said, leaving the country exposed to another round of depreciation. The franc depreciated by 4.4 per cent against the US dollar in 2025, compared with 9.4 per cent in 2024. In the first six months of 2026, its depreciation stood at 0.87 per cent, according to the presentation. Trade deficit remains a challenge Nsengiyumva’s comments came as Rwanda continues to face a sizeable gap between the value of goods it exports and those it imports. The country’s total international trade increased from $4.9bn in 2017 to $9.4bn in 2025. Exports rose from $1.9bn to $3.5bn over the same period, while imports reached nearly $6bn in 2025. This left a trade deficit of about $2.4bn last year. Agriculture's shrinking GDP share MP Valens Muhakwa raised concerns about the declining contribution of agriculture to GDP despite continued government investment in the sector. He argued that food production needs greater attention because food remains a basic necessity for households. The Prime Minister’s presentation showed that agriculture’s contribution to GDP declined from 25.6 per cent in 2017 to 20.3 per cent in 2025, while industry’s share increased from 17.5 per cent to 22 per cent and services from 48.3 per cent to 52.3 per cent. The PM said the decline in agriculture’s share is partly linked to the strategy of moving towards a more knowledge-based economy, industrialisation and higher-value exports. However, he acknowledged that low productivity remains one of the challenges affecting the economy.
