Rwanda’s growth on track -IMF

The Executive Board of the International Monetary Fund (IMF) has reported that Rwanda’s economic growth was constant and strong.This was contained in the fourth review under a three-year Policy Support Instrument (PSI) for the country that was completed on June 7.According to a press release by the IMF, real GDP growth is estimated at 8.6 percent for 2011, driven by agricultural output, exports, and domestic demand.“The fiscal framework for 2012/13 is in line with the main objectives of the PSI, and the authorities committed to delay non-priority spending rather than resort to additional domestic financing if revenue collections fall short of target” reads part of the press release.“All the four reviews by IMF under PSI have been very successful and this underlines how good we are at managing the economy,” said John Rwangombwa, Minister of Finance and Economic Planning.“Despite the current world economic woes, we have been able to keep developing and managed to register 8.6 GDP growth last year. This year we expect the GDP to be at 7.7 percent”.The IMF report also indicated that inflation rose sharply-mainly due to rising food and fuel prices but also an accommodative monetary policy-but stayed in single digits (8.3 percent in March 2012) and was the lowest in the region. All quantitative assessment criteria for end-December 2011, including fiscal and monetary targets, were met, the report says. Most structural benchmarks were also met, albeit some with delays.In completing the review, the Executive Board approved the modification of the end-June 2012 assessment criteria, according to IMF. It goes on to state that, growth is expected to remain high in 2012, but risks remain-a renewed global slowdown or sharply higher world fuel prices could threaten growth, revenue, and inflation objectives. “Efforts are ongoing to further strengthen public financial management and enhance revenue administration. Monetary policy is aimed at maintaining inflation in single digits, and efforts are continuing to improve the liquidity management framework,” it reads. “To that end, it will be important to be proactive in monetary policy and improve the functioning of the money and foreign exchange markets. Improving access to financial services while safeguarding financial stability remains a key objective for Rwanda. Careful management of the consolidation of Savings and Credit Cooperatives will be very important in that regard”.The IMF’s framework for PSIs is designed for low-income countries that may not need IMF financial assistance, but still seek close cooperation with the IMF in preparation and endorsement of their policy frameworks. PSI-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving the civil society and development partners. A country’s performance under a PSI is normally reviewed bi-annually.