- As the Rwandan economy is achieving significant growth, mainly in the subsistence agriculture sector, the IMF has approved a new disbursement for the country's poverty reduction programmes.
The International Monetary Fund (IMF) today announced it had reviewed Rwanda's economic performance under the Poverty Reduction and Growth Facility (PRGF) arrangement. The positive assessment resulted in an agreement that enables Rwanda to draw up to US$ 810,000 under the arrangement immediately, the Fund said.
In commenting on the IMF's discussion on Rwanda, Eduardo Aninat, IMF Deputy Managing Director, said that, "given Rwanda's difficult social conditions, rapid progress in reducing poverty and achieving sustainable economic growth remains critical."
Developments during 2002 had been encouraging: strong growth in subsistence agriculture delivered substantial relief to Rwanda's poor, inflation was kept at a low level, and large inflows of external assistance helped strengthen the country's official reserves position.
- This performance reflected both a creditable policy implementation and the impact of favourable climatic conditions, said Mr Aninat. "In particular, substantive revenue measures were implemented that constitute an important step toward fiscal sustainability, and meaningful actions were taken to strengthen the administration of the public finances and the banking sector.
The IMF official however reminded the Rwandan government that its "active contribution to the procurement of peace in the region will be important for securing donor aid and improving the investment climate in the region."
- With a challenging social and political transition now under way, continued implementation of strong policies is needed to maintain macroeconomic stability and to lay the foundations for sustained economic growth and poverty reduction, said Mr Aninat.
The Rwandan government had informed the IMF that monetary policy would aim at keeping inflation low in 2003. Fiscal policy was to seek a further strengthening of the government's domestic revenue base, while providing resources to support exceptional operations - including elections and continued demobilisation of the military - and priority expenditures in critical social areas.
In addition, Rwanda's 2003 economic program envisaged additional measures to strengthen public financial administration and to addresses weaknesses in the banking system.
- The continued support of the international community, through technical and financial assistance, will be critical to Rwanda's economic reconstruction, said Mr Aninat. Prudent economic management and satisfactory progress with structural reforms would "facilitate such support."
Much progress had been made in implementing the structural reform agenda, the IMF official said, "but progress has been slow in some areas mainly because of capacity constraints. High priority would need to be given to the implementation of the policies set out in the Poverty Reduction Strategy Paper, particularly those for boosting private investment and trade and diversifying the export base of the economy," Mr Aninat concluded.
Rwanda's Poverty Reduction and Growth Facility (PRGF) arrangement was approved on 24 July 2002, for US$ 5.6 million. So far, Rwanda has drawn about US$ 815,000 under the arrangement. With today's IMF decision, this may however be doubled within short. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5 ½-year grace period on principal.
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