Rwanda: Request for a New Policy Support Instrument—Informational Annex
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International Monetary Fund
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Publication Date:
03 Aug 2010
eISBN:
9781455207633
Language:
English
Keywords:
ISCR; CR; Rwanda; authority; exchange rate; GDP; MCM mission; update assessment; Sta mission; fund request; SDR equivalent; Bank supervision; Foreign exchange transactions; Budget planning and preparation
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Rwanda has achieved high growth and macroeconomic stability under three successive Poverty Reduction Growth Facility (PRGF) arrangements. Executive Directors welcomed the new Private Sector Investment (PSI) program, which aims to consolidate macroeconomic stability and achieve sustained broad-based growth while reducing Rwanda’s aid dependency. They emphasized that this can be achieved by maintaining sustainable fiscal position, strengthening monetary and exchange rate policies, and supporting growth with structural reforms. In view of this, Directors approved a three-year PSI for Rwanda for preserving macroeconomic stability, consistent with the authority's poverty reduction and growth strategy, Economic Development and Poverty Reduction Strategy (EDPRS).

Abstract

Rwanda has achieved high growth and macroeconomic stability under three successive Poverty Reduction Growth Facility (PRGF) arrangements. Executive Directors welcomed the new Private Sector Investment (PSI) program, which aims to consolidate macroeconomic stability and achieve sustained broad-based growth while reducing Rwanda’s aid dependency. They emphasized that this can be achieved by maintaining sustainable fiscal position, strengthening monetary and exchange rate policies, and supporting growth with structural reforms. In view of this, Directors approved a three-year PSI for Rwanda for preserving macroeconomic stability, consistent with the authority's poverty reduction and growth strategy, Economic Development and Poverty Reduction Strategy (EDPRS).

Appendix I. Rwanda: Relations with the Fund

(As of April 30, 2010)

I. Membership Status: Joined: September 30, 1963; Article VIII

II. General Resources Account:

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III. SDR Department:

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IV. Outstanding Purchases and Loans:

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V. Latest Financial Arrangements:

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VI. Projected Payments to Fund3

(SDR Million; based on existing use of resources and present holdings of SDRs):

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VII. Implementation of HIPC Initiative:

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VIII. Implementation of Multilateral Debt Relief Initiative

(MDRI)

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Decision point—point at which the IMF and the World Bank determine whether a country qualifies for assistance under the HIPC Initiative and decide on the amount of assistance to be committed.

Interim assistance—amount disbursed to a country during the period between decision and completion points, up to 20 percent annually and 60 percent in total of the assistance committed at the decision point (or 25 percent and 75 percent, respectively, in exceptional circumstances).

Completion point—point at which a country receives the remaining balance of its assistance committed at the decision point, together with an additional disbursement of interest income as defined in footnote 4 above. The timing of the completion point is linked to the implementation of pre-agreed key structural reforms (i.e., floating completion point).

IX. Safeguards Assessments:

Under the Fund’s safeguards assessment policy, the National Bank of Rwanda (NBR) was subject to an update assessment with respect to the PRGT arrangement approved on June 5, 2006 (effective June 12, 2006). The assessment’s priority recommendations concerned timely publication of the audited financial statements, further improving external audit arrangements, and full implementation of IFRS. An update safeguards assessment is not required in the case of the non-financial arrangement with the Fund such as the PSI, however, such assessment may be voluntary requested by the country.

X. Exchange System:

The currency of Rwanda is the Rwandan franc. On December 1998, Rwanda accepted the obligations under Article VIII, Sections 2, 3 and 4 of the IMF and maintains a system free of restrictions on the making of payments and transfers for current international transactions. As of May 14, 2010 the official exchange rate was RWF 579.07 per U.S. dollar. Under the revised classification of the exchange rate arrangements, Rwanda’s exchange rate is classified as “stabilized arrangement”. The official reference exchange rate is determined daily by the National Bank of Rwanda (NBR) using a 5 day weighted average rate of commercial bank rates and the NBR’s rate for the previous day’s operations to which a fixed margin of +/-0.6 percent is applied to derive the selling and buying rates. 7 With a view to introducing more flexibility in its exchange rate policy, since March 24, 2010 NBR’s intervention in the foreign exchange market is based on interbank rates and at pre-set criteria.

XI. Article IV Consultation:

Rwanda is on the revised 24-month consultation cycle. The Executive Board discussed the staff report for the 2008 Article IV consultation (IMF Country Report No. 09/58) on January 12, 2009.

XII. FSAP Participation, ROSCs, and OFC Assessments:

A Report on Observance of Standards and Codes on Fiscal Transparency (ROSC) was issued in July 2003. A Financial Sector Assessment Program (FSAP) took place in February 2005. Rwanda has not had an Offshore Financial Center (OFC) assessment.

XIII. Technical Assistance and Future Priorities:

List of Technical Assistance Missions

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Future priorities

The priorities for the Fund’s technical assistance in the next year will be in the area of monetary and exchange rate management, supervision of bank and nonbank financial institutions, public finance management and compilation of national account statistics.

XIV. Resident Representative:

Mr. Dmitry Gershenson assumed his duties as Resident Representative in February 2009.

XV. Management Visit:

The Deputy Managing Director, Mr. Portugal, visited Rwanda during May 3-5, 2007.

Appendix II. Rwanda: Joint Bank-Fund Work Program VI. June 2010–June 2011

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1

Now known as Extended Credit Facility (ECF).

2

On June 4, the PRGF was extended from June 11, 2009 to August 14, 2009, to allow time for the completion of the sixth and final review, and for making the final disbursement under the PRGF arrangement.

3

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

4

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts can not be added.

5

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

6

The Multilateral Debt Relief Initiative (MDRI) provides 100 percent debt relief to eligible member countries that are qualified for the assistance. The debt relief covers the full stock of debt owed to the Fund as of end-2004 which remains outstanding at the time the member qualifies for such debt relief. The MDRI is financed by bilateral contributions and the Fund’s own resources, as well as the resources already disbursed to the member under the HIPC Initiative (see Section VII above).

7

From January 16th, 2009 to January 11th, 2010, The NBR’s average reference rate (ARR) was calculated as the ten days weighted moving average. With effect from January 12th, 2010, the ARR has changed to 5 days moving average.

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Cover IMF Staff Country Reports
Rwanda: Request for a Three-Year Policy Support Instrument: Staff Report; Staff Supplement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Rwanda
Author:
International Monetary Fund
Volume/Issue:
Volume 2010: Issue 200
Publisher:
International Monetary Fund
ISBN:
9781455207633
ISSN:
1934-7685
Pages:
107
DOI:
https://doi.org/10.5089/9781455207633.002