Rwanda: Staff Report for the 2012 Article IV Consultation, Fifth Review Under the Policy Support Instrument, and Request for Modification of Assessment Criteria—Informational Annex

The article summarizes the positive economic development of Rwanda and its internal and external policies. Rwanda’s economy is referred to as a success story, but it also faces certain challenges. The country is focused on maintaining macroeconomic stability, sustaining sturdy growth, and reducing poverty without foreign dependence. Fiscal and monetary policies have played key roles in economic growth. External stability is manageable, as it has significant profit in the global market. The authorities review this remarkable success of Rwanda’s economy as a great achievement.

Abstract

The article summarizes the positive economic development of Rwanda and its internal and external policies. Rwanda’s economy is referred to as a success story, but it also faces certain challenges. The country is focused on maintaining macroeconomic stability, sustaining sturdy growth, and reducing poverty without foreign dependence. Fiscal and monetary policies have played key roles in economic growth. External stability is manageable, as it has significant profit in the global market. The authorities review this remarkable success of Rwanda’s economy as a great achievement.

Relations With the Fund

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 Fund 13

(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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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).

VIII. Implementation of Multilateral Debt Relief Initiative (MDRI)

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IX. Implementation of Post-Catastrophe Debt Relief (PCDR): Not Applicable

X. Safeguards Assessments:

The 2007 safeguards update assessment noted that since 2003, the National Bank of Rwanda (NBR) strengthened its own safeguards: External audits were completed on time, the Committee of Auditors became operational, and the Internal Audit Department helped in the strengthening of controls over monetary program data. The update assessment’s priority recommendations concerned timely publication of the audited financial statements, further improving external audit arrangements, and conformity with of IFRS. Safeguards policy does not require an update safeguards assessment in the case of the non-financial arrangement with the Fund. However, such assessment may be voluntary requested by the country, and the NBR has made a formal request for the update assessment.

XI. 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 October 31, 2012, the official exchange rate was RWF 627.2 per U.S. dollar. The exchange rate has depreciated slightly since end-2011. The de facto exchange rate regime is currently classified as crawl like and the de jure as floating. With effect from December 27, 2010, the official exchange rate is the weighted average computed from a previous foreign exchange interbank market transaction and an intervention transaction by the National Bank of Rwanda (NBR). The Average Reference Rate, formerly used for the official exchange rate, was eliminated. The NBR applies a margin of +/-0.8 percent to the official rate to derive a customer rate. With a view to introducing more flexibility in its exchange rate policy, since March 24, 2010, NBR introduced an exchange rate corridor framework.

XII. Article IV Consultation:

Rwanda is on the revised 24-month consultation cycle. The Executive Board discussed the staff report for the 2010 Article IV consultation (IMF Country Report No. 11/19) on December 20, 2010.

XIII. 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, and a FSAP update was completed in June 2011. Rwanda has not had an Offshore Financial Center (OFC) assessment.

XIV. Policy Support Instrument (PSI):

A three-year PSI program was approved on June 16, 2010, with an effective date of June 30, 2010. The second review and the third review under the PSI were completed on June 23, 2011 and January 9, 2012, respectively, while the fourth review was completed on June 6, 2012XV. Technical Assistance and Future Priorities:

List of Technical Assistance Missions (2011–2012)

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Future priorities

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

XVI. Resident Representative:

Ms. Farahbaksh Mitra assumed her duties as Resident Representative in August 2012.

XVII. Management Visit:

The Director of the African Department, Ms Antoinette M Sayeh, visited Rwanda during July 19 – 20, 2012.

Rwanda: Joint Bank-Fund Work Program June 2012–July 2013

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Now known as Extended Credit Facility (ECF).

12

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 PRGT arrangement.

13

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

14

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 cannot be added.

15

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.

1

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).

Rwanda: 2012 Article IV Consultation and Fifth Review under the Policy Support Instrument and Request for Modification of Assessment Criteria —Staff Report; Staff Supplement; Public Information Notice and Press Release on the Executive Board Discussion; and Statement by the Executive Director for Rwanda
Author: International Monetary Fund. African Dept.