VILLAGE URUGWIRO - The recent financial crisis that has hit several developed countries for the past two months may have come with advantages to the developing countries.
This was said recently by President Paul Kagame while responding to a question by a journalist about the effect of this crisis on Rwanda which has mainly devastated the United States.
“Of course there have been negative effects and more are to come because the financial systems of these countries are intertwined with ours, but then it has also had its advantages,” said the President at a press conference held at Urugwiro Village on Tuesday. He cited an example of the oil products whose prices fell as a result of this crisis.
“A barrel of oil had gone up to over 100 US dollars and these prices have since gone down following the outbreak of the crisis and this has worked to the advantage of the non-oil producing nations like us,” said the President.
Subsequent to the reduction in the prices of oil products the Rwandan government recently announced a countrywide cut of fuel prices at pumps and this week’s announcement put the price for both diesel and petrol at Rwf 756, a cut that represents 13.6 percent.
This came following a further reduction announced last month that had brought the prices down by 4.3 percent.
Kagame also said that this crisis will teach a lesson to some practitioners especial those in the financial markets who have not been duly following standard regulations.
“There has been a lot of recklessness in the financial markets, in that some people will have to sober up after this crisis and respect some norms,” he said.
The negative impact of the financial crisis, he said, include the effect on Foreign Direct Investments (FDIs) and reduction in the level of remittances from nationals staying in those countries.
“It will definitely affect the inflow of Foreign Direct Investments and the level of remittances which are even higher than what we had expected are estimated in couple of hundreds of million dollars,” he added.
Kagame also said that some development partners may take advantage of the crisis to refuse to honour their commitments “but hopefully it will not get to that because normally these pledges do not involve a lot of money.”
The crisis hit the developed countries resulting into countries like the US drawing cash from the Federal Reserve to bail out banks which had lost trillions of dollars.