The Managing Director of the International Monetary Fund, Christine Lagarde, has urged Rwanda to mobilise more domestic resources to achieve its development goals with less dependence on donor funds.
Lagarde was speaking at a public lecture she delivered at the Parliament, yesterday.
The IMF chief is in Rwanda on three-day official visit.
Madame Lagarde's full speech at the Parliament.
“Mobilising domestic revenues will be key in order to strengthen the financial independence of Rwanda and ensure that it is less dependent on external aid,” Lagarde said.
Rwanda has a tax revenue of almost 16 per cent of GDP, and Lagarde pledged continued IMF support to boost the country’s efforts to increase the ratio.
She pointed out that IMF has been engaged with Rwanda in providing technical assistance and capacity building in revenue administration and collection and the assistance will be proceed.
“We will continue the support to broaden the tax base and strengthen the administration so as the bridge the dependency gap,” Lagarde said.
Senior government officials, parliamentarians, diplomats, members of the civil society and the private sector attended the lecture that focused on how to achieve the country’s vision 2020 and poverty reduction strategy – EDPRS2.
One of Rwanda’s major goals is become a middle-income country by the year 2020.
Developing private sector
The IMF chief advocated for private sector development to reduce the over reliance on the public sector and harnessing the potential of regional integration in support of export diversification and overcome geographic constraints.
The theme of the lecture was “Rwanda taking on the future staying ahead of the curve.”
Lagarde observed that infrastructure gaps continue to hold back the private sector from thriving with most hindrances being in energy and transportation.
“There is need for a reasonable resource catalogue that does not lay a heavy burden on the economy. The IMF has been engaged with the government in exploring multiple combinations of finance sources,” she said.
Lagarde also emphasised the importance of skills development, saying that the proper set of skills in the labour force would not only accelerate private sector development, but also enable the youth be active players in the economy.
She commended the East African regional integration initiatives, saying Rwanda can reach out to its neighbours for her export oriented business to flourish even more.
“Deeper engagement in the East African Community would allow Rwanda to benefit from regional infrastructure projects in key areas including power generation and transportation which is critical in unlocking Rwanda’s potential,” Lagarde said.
She further lauded the nation for being what she termed as a positive example for countries striving to exit fragility as it was offering valuable lessons from homegrown initiatives.
“Since the early 2000s, Rwanda has grown at an average of about 8 per cent - well above the regional average and at par with emerging Asian economies,” Lagarde added.
Among the strategies she said she found impressive and recommendable was the inclusive growth policy which was evident from the women representation in politics, governance and business ownership.
Finance and Economic Planning minister Claver Gatete recognised the role of IMF in the economic stability and progress currently being witnessed.
He said that the International Monetary Fund had played a critical role in informing the decisions and government policies that the cooperation will continue to achieve the nation’s ambitions.