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© 2021 International Monetary Fund
WP/21/115
IMF Working Paper
Fiscal Affairs Department
SDG Financing Options in Rwanda: A Post-Pandemic Assessment
Prepared by Victor Duarte Lledo and Roberto A. Perrelli1
under the guidance of Dora Benedek and Alexander F. Tieman
Authorized for distribution by Abdelhak Senhadji
April 2021
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Abstract
This paper uses a novel macroeconomic framework to identify policy and financing options to help Rwanda achieve its sustainable development goals (SDGs). Under current policies, Rwanda would meet its SDGs right after 2050. Active policies that combine fiscal reforms and higher private sector participation could fulfill more than one third of Rwanda’s post-pandemic SDG financing gap, enabling the country to meet its SDG targets by 2040. For Rwanda to meet its SDGs by 2030, active policies would need to be complemented with about 13¾ percentage points of GDP in additional resources annually until then.
JEL Classification Numbers: Q01, H11, H20, H87, O23, I15, I25, F35
Keywords: Sustainable Development Goals, Development, Fiscal Policy, Structural Reform
Author’s E-Mail Address: VLledo@imf.org and RPerrelli@imf.org
Contents
Abstract
I. Introduction
II. A Dynamic Financing Framework for Sustainable Development Goals
III. Rwanda’s SDG Financing: Pre-Pandemic Situation
A. Pre-Pandemic Development Progress and Challenges
B. Pre-Pandemic Financing Gaps
IV. The COVID-19 Impact on Rwanda
V. Rwanda’s SDG Financing: Post-Pandemic Gap and Policy Options
VI. SDG Financing: The Perils of Scarring
VII. Concluding Remarks
References
Box 1. Rwanda’s COVID-19 Crisis Response
Figures
Figure 1. Rwanda: Performance across Selected SDGs
Figure 2. Rwanda: SDG Needs according to IMF Costing Mission
Figure 3: Rwanda: Pandemic-Related Real Output Losses, 2018–25
Figure 4: Rwanda: Gross Nominal Public Debt Paths, 2018–30
Figure 5. Rwanda: Changes in Available Fiscal Space to Invest in SDGs, 2020–30
Figure 6. Rwanda: Impact of MTRS on Tax Revenues, 2018–30
Figure 7. Rwanda: Impact of Scarring on Human Capital Per Worker, 2018–50
Figure 8. Rwanda: Impact of Scarring on Real GDP Growth Rates, 2018–50
Figure 9. Rwanda: Impact of Active Policies on Per Capita Income, 2018–50
Figure 10. Rwanda: Impact of Active Policies on Human Capital Per Worker, 2018–50
Tables
Table 1. Rwanda: Selected Economic Indicators
Table 2. Rwanda: Dynamic Financing Framework Scenarios, 2020–50 (Pre-COVID)
Table 3. Rwanda: Additional Grants Needed to Meet 2030 SDGs
Table 4. Rwanda: Dynamic Financing Framework Scenarios, 2020–50 (Post-COVID)