The International Monetary Fund (IMF) said has concluded arrangements to boost Rwanda’s economy with about US$204 Million in Stand-by Credit Facility.
The bailout is intended to Support growth, Poverty reduction and improve the country’s resilience to future uncertainties in the global economy. The Standby Credit Facility (SCF) provides financial assistance to low-income countries (LICs) with short-term balance of payments needs.
According to a statement by Deputy Managing Director and Acting Chair IMF Min Zhu, the East African Community Member state demonstrated success in economic performance in 2015 and growth was determined by strong construction and services activity, while inflation remained contained.
“Nevertheless, the situation has grown more challenging in recent months due to external shocks related to commodity prices and tighter conditions for private inflows. Combined with the appreciation of the U.S. dollar, these have reduced export receipts and put downward pressure on the exchange rate and official reserves”, Zhu said.
Rwanda authorities said they were taking “decisive” steps to address external imbalances. The IMF said it was important for the nation to adopt exchange rate flexibility as the principal adjustment tool.
The fund said the a program can then be supported by tighter fiscal and monetary policies to help curb demand for imports.
“Implementation of these policies should maintain GDP growth of around 6 percent in both 2016 and 2017, while IMF financing under the Standby Credit Facility will help bolster reserves” the statement read.
The authorities are also accelerating policies to diversify and promote higher value exports, which should help strengthen the country’s medium-term growth prospects and its resilience to future shocks.
Rwanda Finance Minister said the Claver Gatete said the financial bailout would help the nation from falling into economic traps
“The IMF facility is actually to help us not going into problems and that facility is $200 million,” Gatere said.
In the budget speech, Gatete said Rwanda’s overall expenditure in 2016/17 fiscal year would rise to 1.95 trillion francs ($2.60 billion) from 1.81 trillion francs in the year ending this June.