Rwanda’s economic outlook is stable and officials should be commended for maintaining economic reforms that have delivered the country to satisfactory economic performance, the International Monetary Fund (IMF) has said.
The Executive Board of the Fund, on Friday, completed a third review of Rwanda’s economic performance under a three-year programme supported by the IMF’s Policy Support Instrument (PSI), announcing a number of policies that need to be pursued by Rwanda to maintain a satisfactory economic standing.
Describing the country’s economic performance as “satisfactory”, IMF officials said in a release that Rwanda’s authorities will need to maintain the momentum of reforms, including on revenue mobilisation while strengthening the implementation of government projects.
The Fund said Rwanda’s growth in 2015 is expected to remain strong, while the economic outlook is stable.
“The cautious fiscal stance and monetary policy are consistent with the need to preserve policy buffers,” the IMF said.
The fund’s officials lauded the framework for the 2015/16 Budget because it gives “priority to the public investment programme in line with available resources, includes measures to improve domestic revenue mobilisation, protects priority spending, and limits the crowding out of credit to the private sector”.
The Fund warned that the adoption of electronic billing machines is yet to gain full traction and that the agenda on agricultural and property taxation is yet to be carried out.
It also highlighted that Rwanda’s infrastructure investment needs remain significant and noted that authorities have stepped up efforts to strengthen project selection and prioritisation to maintain debt sustainability.
The Fund lauded the country’s current monetary policy stance, describing it as “appropriate.”
“The economy has been operating in a low inflationary environment, an amply liquid banking system, and ample credit to the private sector. Efforts to improve the regulatory framework have been advancing satisfactorily and the consolidation of the SACCOs into one cooperative will further improve the supervisory oversight,” IMF officials said in the release.
The Minister for Finance and Economic Planning, Amb. Claver Gatete, welcomed the Fund’s positive review, describing it as a “vote of confidence” for the country’s leadership.
“It gives confidence to rating agencies and it reassures us that we are in the right direction for our economic performance,” he told The New Times yesterday.
IMF’s Policy Support Instrument (PSI) is designed for low-income countries that do not need or may not want financial aid to boost their balance of payments.
The PSI helps countries to design effective economic programmes that once approved by the IMF’s executive board provides critical information to donors, multilateral development banks, and markets about the country’s economic standing.