KIGALI - The International Monetary Fund (IMF) has completed the first review under the three-year Policy Support Instrument (PSI) for Rwanda, a programme aimed at consolidating macroeconomic stability in the country.
The programme focuses on maintaining sustainable fiscal position, strengthening monetary and exchange rate policies and supporting growth with structural reforms to diversify the export base and improving the business environment.
The PSI for Rwanda, approved on June 16, 2010 also targets achieving sustained broad-based growth, and reducing Rwanda’s aid dependency.
“Rwanda authorities are commended for satisfactory implementation of the economic programme supported by the PSI for 2009/10, carried out against the backdrop of a global economic downturn,” said Murilo Portugal, the Deputy Managing Director and Chairman of the IMF Executive Board on Rwanda.
He added that Rwanda’s economy is showing clear signs of recovery from the external and domestic shocks of the past two years.
However, uncertainty in external demand, a slow pick-up in credit to the private sector, and the need to secure favorable financing to implement their investment plan to close the infrastructure gap continue to pose policy challenges, he said in a statement.
Portugal hailed the authorities for their gradual unwinding of the fiscal stimulus while at the same time mobilizing additional domestic revenues and protecting priority spending.
“Monetary policy has been accommodative to rekindle credit to the private sector and further support growth. The authorities are committed to regularly assess the inflation outlook in order to safeguard the gains made in macroeconomic stability that currently underpin the economic recovery,” he noted
Portugal urged that given rising levels of non-performing loans, further efforts are needed to strengthen bank and non-bank supervision to ensure that higher access to credit does not endanger financial stability.
An IMF delegation led by Catherine McAuliffe, which visited Rwanda in October, hailed the country’s structural reforms, public financial management and continued roll-out of the government financial information system.