COVID-19: Central bank announces Rwf50 billion stimulus to spur lending

The National Bank of Rwanda has put in place Rwf50 billion stimulus package to increase the liquidity of commercial banks in order to sustain lending to the private sector.

This is one of the interventions by the central bank to limit the impact of coronavirus on the economy.

 

The facility is expected to aid banks with liquidity challenges to borrow for short periods of time to be able to continue injecting money into the economy.

 

The fund will be flexible with windows ranging from overnight to 3, 6 and 12 months.

 

“This facility is available for the next six months and shall be disbursed at the discretion of the central bank,” a statement signed by central bank Governor John Rwangombwa reads in part.

The central bank also directed commercial banks to ease loan repayment conditions to borrowers whose income streams have been affected by the global COVID-19 pandemic.

Due to this, some banks are likely to experience mild liquidity challenges as loan repayment slows down and more demand in disbursement.

Rwangombwa said that the fund will commence disbursement as soon as they notice evidence of liquidity in the local market.

The fund is expected to allow banks to continue disbursements to the private sector which will be necessary to keep them afloat and maintain business survival rates.

The intervention comes at a time when a number of sectors have noted that they could be affected following the pandemic reduced their cash flow and revenue.

The fund coupled with the restructuring of loans and ease of loan repayment will also allow firms to keep supply and value chains open by re-investing the returns from their revenue.

This will see the country maintain the supply of goods and products necessary for consumption.

Coronavirus cases in Rwanda rose to 11, prompting the government to suspend all commercial flights

cmwai@newtimesrwanda.com

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