Abstract
Third Review Under the Policy Coordination Instrument-Press Release; Staff Report; and Statement by the Executive Director and Staff Representative for Rwanda
FOR IMMEDIATE RELEASE
GDP growth is projected to contract by 0.2 percent in 2020 and is expected to recover to 5.7 percent next year.
To address the fallout from the COVID-19 pandemic, the authorities acted swiftly by adopting early stringent containment measures and implementing a large policy package.
Containing fiscal risks and planning contingency measures remains critical given the highly uncertain economic outlook.
Reforms to accelerate the transition to a private sector-led growth will be key in the post-pandemic period given the limited fiscal space.
Washington, DC – December 16, 2020: The Executive Board of the International Monetary Fund (IMF) concluded on December 16, 2020 the third review of Rwanda’s program supported by the IMF’s Policy Consultation Instrument (PCI)1. The PCI program was approved on June 28, 2019 (Press Release No.19/258) to support the implementation of Rwanda’s National Strategy for Transformation (NST).
Rwanda continues to grapple with the fallout from the COVID-19 pandemic. Real GDP contracted by 4.4 percent year-on-year in the first half of 2020; but a recovery is afoot following the end of the full lockdown in the second half. As a result, real GDP growth is expected to be slightly negative at -0.2 percent in 2020, and is projected to rebound to 5.7 in 2021, albeit below potential.
The authorities’ policy measures in response to the pandemic were generally well-designed, and appropriately aimed at providing support to households and businesses, boosting healthcare spending, and providing sufficient liquidity to the banking system and relief to borrowers. The associated spending needs coupled with revenue underperformance due to the crisis have caused deviations from the earlier fiscal program targets under the program. As a result, fiscal deficit is expected at 8.5 percent of GDP in FY2020/21, with public debt projected at 67 percent of GDP at end-2020. The crisis has also affected progress on structural reforms.
While the immediate policy priorities have shifted to supporting the economy through the crisis, the objectives of the PCI, which expires in June 2022, remain appropriate. The remainder of the program aims to strike a balance between sustaining the economic recovery and maintaining fiscal responsibility. The authorities and staff agreed that going forward it will be critical to monitor and contain financial sector and fiscal risks including from state-owned enterprises.
Following the Executive Board’s discussion of Rwanda, Mr. Tao Zhang, Deputy Managing Director and Acting Chair, issued the following statement:
“The COVID-19 pandemic continues to take a heavy toll on Rwanda’s economy and society. The near-term outlook remains highly uncertain. Growth is expected to contract in 2020, putting additional pressures on public finances and the balance of payments.
“The authorities’ fiscal package in response to the crisis is providing needed support to vulnerable households and businesses. Strong reporting and procurement practices are key to ensuring the effectiveness and proper oversight of this spending.
“The uncertain outlook calls for sound contingency planning and fiscal risk management. To preserve fiscal space, the authorities should reprioritize spending and seek additional concessional financing should the outlook deteriorate further. Fiscal risks from state-owned enterprises and state-guaranteed loans should be closely monitored.
“Monetary policy has rightly been accommodative, and temporary extraordinary measures have provided liquidity to the banking sector. Looking ahead, the central bank should keep monetary policy data driven and continue to closely monitor credit and liquidity risks, including from loan restructuring, to safeguard financial stability.
“Adopting a credible and growth-friendly fiscal consolidation strategy after the crisis abates will be critical to preserve debt sustainability while supporting the nascent recovery. The strategy should be centered on measures to re-ignite domestic revenue mobilization, streamline non-priority spending, and re-prioritize public investment. Such measures could be announced and legislated before the end of the program to support their credibility.
“Going forward, the authorities should continue pushing ahead with structural reforms to promote private sector-led and inclusive growth. Other priority reforms include strengthening governance, fiscal transparency and risk management, improving tax compliance, and further strengthening the interest rate-based monetary policy framework.
Rwanda: Selected Economic Indicators, 2019–2025
Overall deficit excl. spending on materialized contingent liabilities and other items already incl. in the DSA.
Rwanda: Selected Economic Indicators, 2019–2025
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1st Rev. | RCF-2 | Act. | 1st Rev. | RCF-2 | Proj. | 1st Rev. | RCF-2 | Proj. | RCF-2 | Proj. | Proj. | Proj. | Proj. | ||||
| Output and prices | |||||||||||||||||
| Real GDP | 8.5 | 9.4 | 9.4 | 8.0 | 2.0 | -0.2 | 8.0 | 6.3 | 5.7 | 8.0 | 6.8 | 8.0 | 7.5 | 7.5 | |||
| GDP deflator | 1.8 | 0.4 | 0.4 | 5.6 | 6.5 | 8.3 | 5.0 | 1.0 | 2.3 | 5.0 | 4.3 | 5.0 | 5.0 | 5.0 | |||
| CPI (period average) | 2.3 | 2.4 | 2.4 | 5.4 | 6.9 | 8.0 | 5.0 | 1.0 | 2.5 | 5.0 | 4.1 | 5.0 | 5.0 | 5.0 | |||
| CPI (end period) | 5.7 | 6.7 | 6.7 | 5.0 | 5.0 | 5.0 | 5.0 | 5.0 | 2.3 | 5.0 | 5.0 | 5.0 | 5.0 | 5.0 | |||
| Terms of trade (deterioration, -) | -1.8 | -1.8 | -1.8 | -0.1 | -3.3 | 0.2 | 0.0 | -0.4 | 0.0 | 0.7 | 1.0 | 1.1 | 0.8 | 2.3 | |||
| Money and credit | |||||||||||||||||
| Broad money (M3) | 21.8 | 15.4 | 15.4 | 21.9 | 5.1 | 11.3 | 17.4 | 22.3 | 12.0 | 16.1 | 13.6 | 22.0 | 14.9 | 12.8 | |||
| Reserve money | 21.5 | 17.2 | 17.2 | 22.1 | 5.8 | 12.1 | 17.8 | 21.4 | 11.2 | 20.3 | 17.8 | 19.8 | 14.9 | 12.8 | |||
| Credit to non-government sector | 17.6 | 12.6 | 12.6 | 14.8 | 10.2 | 14.1 | 7.9 | 10.3 | 12.6 | 11.4 | 12.1 | 14.0 | 13.7 | 14.0 | |||
| M3/GDP (percent) | 27.9 | 26.3 | 26.3 | 29.8 | 25.4 | 27.0 | 30.9 | 28.9 | 28.0 | 29.6 | 28.5 | 30.7 | 31.3 | 31.3 | |||
| Budgetary central government | |||||||||||||||||
| Total revenue and grants | 23.6 | 23.6 | 23.6 | 23.1 | 20.1 | 23.1 | 22.9 | 20.7 | 23.4 | 20.6 | 23.2 | 23.8 | 23.9 | 23.3 | |||
| of which: tax revenue | 16.6 | 16.7 | 16.7 | 16.9 | 13.5 | 15.4 | 16.5 | 14.3 | 15.4 | 14.9 | 15.5 | 15.6 | 15.9 | 16.5 | |||
| of which: non-tax revenue | 2.6 | 2.7 | 2.7 | 2.1 | 2.0 | 1.9 | 2.1 | 2.3 | 2.4 | 2.1 | 2.5 | 2.5 | 2.5 | 2.5 | |||
| of which: grants | 4.5 | 4.2 | 4.2 | 4.1 | 4.6 | 5.8 | 4.3 | 4.1 | 5.6 | 3.6 | 5.2 | 5.7 | 5.6 | 4.3 | |||
| Expenditure | 31.9 | 31.8 | 31.8 | 29.0 | 31.7 | 32.9 | 29.2 | 30.1 | 31.3 | 27.2 | 30.2 | 29.6 | 28.3 | 27.0 | |||
| Current | 15.9 | 15.6 | 15.6 | 14.5 | 15.7 | 15.7 | 14.6 | 15.8 | 15.2 | 13.5 | 16.0 | 15.0 | 13.9 | 13.4 | |||
| Capital | 12.7 | 13.2 | 13.2 | 12.1 | 12.1 | 12.9 | 12.7 | 11.9 | 12.2 | 11.3 | 11.5 | 11.4 | 11.5 | 10.9 | |||
| Lending minus repayment | 3.3 | 3.0 | 3.0 | 2.4 | 3.9 | 4.3 | 1.9 | 2.4 | 3.9 | 2.3 | 2.7 | 3.1 | 2.9 | 2.6 | |||
| Primary balance | -6.9 | -6.8 | -6.8 | -4.2 | -9.9 | -8.0 | -4.9 | -7.7 | -6.0 | -4.9 | -5.2 | -4.2 | -3.0 | -2.0 | |||
| Overall balance | -8.2 | -8.1 | -8.1 | -5.9 | -11.6 | -9.7 | -6.3 | -9.4 | -7.9 | -6.6 | -7.0 | -5.8 | -4.4 | -3.7 | |||
| excluding grants | -12.7 | -12.3 | -12.3 | -10.0 | -16.2 | -15.5 | -10.6 | -13.6 | -13.5 | -10.2 | -12.2 | -11.5 | -10.0 | -8.0 | |||
| Debt-creating overall bal. (exc. PKO)1 | -6.7 | -6.6 | -6.6 | -5.7 | -11.3 | -9.1 | -6.4 | -9.6 | -8.1 | -7.1 | -7.0 | -5.8 | -4.4 | -3.7 | |||
| Net domestic borrowing | 2.7 | 0.9 | 0.8 | 0.7 | 2.5 | 1.2 | 2.0 | 1.4 | 2.4 | 0.4 | 1.0 | 2.3 | 0.5 | 0.5 | |||
| Public debt | |||||||||||||||||
| Total public debt incl. guarantees | 59.0 | 58.5 | 58.1 | 58.9 | 68.1 | 65.9 | 59.8 | 75.7 | 71.1 | 76.3 | 73.7 | 73.3 | 72.0 | 70.0 | |||
| of which: external public debt | 46.0 | 45.6 | 45.4 | 48.1 | 55.0 | 55.6 | 49.8 | 61.9 | 58.4 | 63.0 | 60.7 | 61.0 | 61.1 | 60.8 | |||
| PV of total public debt incl. guarantees | 44.5 | 42.8 | 42.8 | 43.1 | 48.2 | 45.5 | 42.9 | 52.5 | 48.8 | 52.5 | 50.6 | 50.9 | 50.4 | 49.3 | |||
| Investment and savings | |||||||||||||||||
| Investment | 28.4 | 26.2 | 26.2 | 28.2 | 20.9 | 21.7 | 28.8 | 22.2 | 22.6 | 24.7 | 26.4 | 28.2 | 28.4 | 27.9 | |||
| Government | 12.7 | 13.2 | 13.2 | 12.1 | 12.1 | 12.9 | 12.7 | 11.9 | 12.2 | 11.3 | 11.5 | 11.4 | 11.5 | 10.9 | |||
| Nongovernment | 15.7 | 13.0 | 13.0 | 16.1 | 8.8 | 8.8 | 16.1 | 10.3 | 10.4 | 13.3 | 14.8 | 16.8 | 16.9 | 17.0 | |||
| Savings | 14.6 | 14.5 | 11.1 | 15.5 | 2.4 | 5.5 | 16.6 | 9.5 | 6.1 | 12.4 | 10.9 | 14.0 | 15.5 | 16.5 | |||
| Government | 3.3 | 3.8 | 3.8 | 4.5 | -0.2 | 1.7 | 4.0 | 0.7 | 2.6 | 3.5 | 2.0 | 3.0 | 4.4 | 5.6 | |||
| Nongovernment | 11.2 | 10.6 | 7.3 | 11.1 | 2.6 | 3.9 | 12.6 | 8.8 | 3.5 | 8.9 | 8.8 | 11.0 | 11.1 | 11.0 | |||
| External sector | |||||||||||||||||
| Exports (goods and services) | 21.5 | 22.2 | 22.2 | 21.8 | 13.1 | 18.2 | 22.6 | 21.2 | 22.7 | 22.6 | 26.2 | 26.8 | 27.7 | 27.9 | |||
| Imports (goods and services) | 34.9 | 36.9 | 36.9 | 34.1 | 29.3 | 34.4 | 34.3 | 33.8 | 39.8 | 35.2 | 42.3 | 41.7 | 41.1 | 39.8 | |||
| Current account balance (incl grants) | -10.6 | -12.4 | -12.4 | -9.9 | -16.7 | -12.2 | -9.1 | -10.5 | -12.5 | -10.0 | -11.4 | -9.6 | -8.4 | -8.0 | |||
| Current account balance (excl grants) | -13.9 | … | -15.1 | -12.7 | -18.5 | -16.2 | -12.2 | -12.7 | -16.5 | -12.3 | -15.5 | -14.2 | -12.8 | -11.4 | |||
| Current account balance (excl. large projects) | -10.4 | … | -11.1 | -8.9 | -15.7 | -11.6 | -8.2 | -9.5 | -11.0 | -8.8 | -9.6 | -7.1 | -6.3 | … | |||
| Gross international reserves | |||||||||||||||||
| In millions of US$ | 1,367 | 1,440 | 1,440 | 1,553 | 1,207 | 1,643 | 1,654 | 1,461 | 1,463 | 1,598 | 1,556 | 1,654 | 1,834 | 1,834 | |||
| In months of next year’s imports | 4.4 | 5.8 | 5.8 | 4.6 | 4.0 | 5.5 | 4.6 | 4.3 | 4.3 | 4.4 | 4.2 | 4.1 | 4.2 | 4.2 | |||
| Memorandum items: | |||||||||||||||||
| GDP at current market prices | |||||||||||||||||
| Rwanda francs (billion) | 9,045 | 9,105 | 9,105 | 10,313 | 9,894 | 9,841 | 11,688 | 10,629 | 10,641 | 12,043 | 11,862 | 13,449 | 15,184 | 17,129 | |||
| Population (million) | 12.4 | 12.4 | 12.4 | 12.7 | 12.7 | 12.7 | 13.0 | 13.0 | 13.0 | 13.3 | 13.3 | 13.6 | 13.9 | 14.2 | |||
Overall deficit excl. spending on materialized contingent liabilities and other items already incl. in the DSA.
Rwanda: Selected Economic Indicators, 2019–2025
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1st Rev. | RCF-2 | Act. | 1st Rev. | RCF-2 | Proj. | 1st Rev. | RCF-2 | Proj. | RCF-2 | Proj. | Proj. | Proj. | Proj. | ||||
| Output and prices | |||||||||||||||||
| Real GDP | 8.5 | 9.4 | 9.4 | 8.0 | 2.0 | -0.2 | 8.0 | 6.3 | 5.7 | 8.0 | 6.8 | 8.0 | 7.5 | 7.5 | |||
| GDP deflator | 1.8 | 0.4 | 0.4 | 5.6 | 6.5 | 8.3 | 5.0 | 1.0 | 2.3 | 5.0 | 4.3 | 5.0 | 5.0 | 5.0 | |||
| CPI (period average) | 2.3 | 2.4 | 2.4 | 5.4 | 6.9 | 8.0 | 5.0 | 1.0 | 2.5 | 5.0 | 4.1 | 5.0 | 5.0 | 5.0 | |||
| CPI (end period) | 5.7 | 6.7 | 6.7 | 5.0 | 5.0 | 5.0 | 5.0 | 5.0 | 2.3 | 5.0 | 5.0 | 5.0 | 5.0 | 5.0 | |||
| Terms of trade (deterioration, -) | -1.8 | -1.8 | -1.8 | -0.1 | -3.3 | 0.2 | 0.0 | -0.4 | 0.0 | 0.7 | 1.0 | 1.1 | 0.8 | 2.3 | |||
| Money and credit | |||||||||||||||||
| Broad money (M3) | 21.8 | 15.4 | 15.4 | 21.9 | 5.1 | 11.3 | 17.4 | 22.3 | 12.0 | 16.1 | 13.6 | 22.0 | 14.9 | 12.8 | |||
| Reserve money | 21.5 | 17.2 | 17.2 | 22.1 | 5.8 | 12.1 | 17.8 | 21.4 | 11.2 | 20.3 | 17.8 | 19.8 | 14.9 | 12.8 | |||
| Credit to non-government sector | 17.6 | 12.6 | 12.6 | 14.8 | 10.2 | 14.1 | 7.9 | 10.3 | 12.6 | 11.4 | 12.1 | 14.0 | 13.7 | 14.0 | |||
| M3/GDP (percent) | 27.9 | 26.3 | 26.3 | 29.8 | 25.4 | 27.0 | 30.9 | 28.9 | 28.0 | 29.6 | 28.5 | 30.7 | 31.3 | 31.3 | |||
| Budgetary central government | |||||||||||||||||
| Total revenue and grants | 23.6 | 23.6 | 23.6 | 23.1 | 20.1 | 23.1 | 22.9 | 20.7 | 23.4 | 20.6 | 23.2 | 23.8 | 23.9 | 23.3 | |||
| of which: tax revenue | 16.6 | 16.7 | 16.7 | 16.9 | 13.5 | 15.4 | 16.5 | 14.3 | 15.4 | 14.9 | 15.5 | 15.6 | 15.9 | 16.5 | |||
| of which: non-tax revenue | 2.6 | 2.7 | 2.7 | 2.1 | 2.0 | 1.9 | 2.1 | 2.3 | 2.4 | 2.1 | 2.5 | 2.5 | 2.5 | 2.5 | |||
| of which: grants | 4.5 | 4.2 | 4.2 | 4.1 | 4.6 | 5.8 | 4.3 | 4.1 | 5.6 | 3.6 | 5.2 | 5.7 | 5.6 | 4.3 | |||
| Expenditure | 31.9 | 31.8 | 31.8 | 29.0 | 31.7 | 32.9 | 29.2 | 30.1 | 31.3 | 27.2 | 30.2 | 29.6 | 28.3 | 27.0 | |||
| Current | 15.9 | 15.6 | 15.6 | 14.5 | 15.7 | 15.7 | 14.6 | 15.8 | 15.2 | 13.5 | 16.0 | 15.0 | 13.9 | 13.4 | |||
| Capital | 12.7 | 13.2 | 13.2 | 12.1 | 12.1 | 12.9 | 12.7 | 11.9 | 12.2 | 11.3 | 11.5 | 11.4 | 11.5 | 10.9 | |||
| Lending minus repayment | 3.3 | 3.0 | 3.0 | 2.4 | 3.9 | 4.3 | 1.9 | 2.4 | 3.9 | 2.3 | 2.7 | 3.1 | 2.9 | 2.6 | |||
| Primary balance | -6.9 | -6.8 | -6.8 | -4.2 | -9.9 | -8.0 | -4.9 | -7.7 | -6.0 | -4.9 | -5.2 | -4.2 | -3.0 | -2.0 | |||
| Overall balance | -8.2 | -8.1 | -8.1 | -5.9 | -11.6 | -9.7 | -6.3 | -9.4 | -7.9 | -6.6 | -7.0 | -5.8 | -4.4 | -3.7 | |||
| excluding grants | -12.7 | -12.3 | -12.3 | -10.0 | -16.2 | -15.5 | -10.6 | -13.6 | -13.5 | -10.2 | -12.2 | -11.5 | -10.0 | -8.0 | |||
| Debt-creating overall bal. (exc. PKO)1 | -6.7 | -6.6 | -6.6 | -5.7 | -11.3 | -9.1 | -6.4 | -9.6 | -8.1 | -7.1 | -7.0 | -5.8 | -4.4 | -3.7 | |||
| Net domestic borrowing | 2.7 | 0.9 | 0.8 | 0.7 | 2.5 | 1.2 | 2.0 | 1.4 | 2.4 | 0.4 | 1.0 | 2.3 | 0.5 | 0.5 | |||
| Public debt | |||||||||||||||||
| Total public debt incl. guarantees | 59.0 | 58.5 | 58.1 | 58.9 | 68.1 | 65.9 | 59.8 | 75.7 | 71.1 | 76.3 | 73.7 | 73.3 | 72.0 | 70.0 | |||
| of which: external public debt | 46.0 | 45.6 | 45.4 | 48.1 | 55.0 | 55.6 | 49.8 | 61.9 | 58.4 | 63.0 | 60.7 | 61.0 | 61.1 | 60.8 | |||
| PV of total public debt incl. guarantees | 44.5 | 42.8 | 42.8 | 43.1 | 48.2 | 45.5 | 42.9 | 52.5 | 48.8 | 52.5 | 50.6 | 50.9 | 50.4 | 49.3 | |||
| Investment and savings | |||||||||||||||||
| Investment | 28.4 | 26.2 | 26.2 | 28.2 | 20.9 | 21.7 | 28.8 | 22.2 | 22.6 | 24.7 | 26.4 | 28.2 | 28.4 | 27.9 | |||
| Government | 12.7 | 13.2 | 13.2 | 12.1 | 12.1 | 12.9 | 12.7 | 11.9 | 12.2 | 11.3 | 11.5 | 11.4 | 11.5 | 10.9 | |||
| Nongovernment | 15.7 | 13.0 | 13.0 | 16.1 | 8.8 | 8.8 | 16.1 | 10.3 | 10.4 | 13.3 | 14.8 | 16.8 | 16.9 | 17.0 | |||
| Savings | 14.6 | 14.5 | 11.1 | 15.5 | 2.4 | 5.5 | 16.6 | 9.5 | 6.1 | 12.4 | 10.9 | 14.0 | 15.5 | 16.5 | |||
| Government | 3.3 | 3.8 | 3.8 | 4.5 | -0.2 | 1.7 | 4.0 | 0.7 | 2.6 | 3.5 | 2.0 | 3.0 | 4.4 | 5.6 | |||
| Nongovernment | 11.2 | 10.6 | 7.3 | 11.1 | 2.6 | 3.9 | 12.6 | 8.8 | 3.5 | 8.9 | 8.8 | 11.0 | 11.1 | 11.0 | |||
| External sector | |||||||||||||||||
| Exports (goods and services) | 21.5 | 22.2 | 22.2 | 21.8 | 13.1 | 18.2 | 22.6 | 21.2 | 22.7 | 22.6 | 26.2 | 26.8 | 27.7 | 27.9 | |||
| Imports (goods and services) | 34.9 | 36.9 | 36.9 | 34.1 | 29.3 | 34.4 | 34.3 | 33.8 | 39.8 | 35.2 | 42.3 | 41.7 | 41.1 | 39.8 | |||
| Current account balance (incl grants) | -10.6 | -12.4 | -12.4 | -9.9 | -16.7 | -12.2 | -9.1 | -10.5 | -12.5 | -10.0 | -11.4 | -9.6 | -8.4 | -8.0 | |||
| Current account balance (excl grants) | -13.9 | … | -15.1 | -12.7 | -18.5 | -16.2 | -12.2 | -12.7 | -16.5 | -12.3 | -15.5 | -14.2 | -12.8 | -11.4 | |||
| Current account balance (excl. large projects) | -10.4 | … | -11.1 | -8.9 | -15.7 | -11.6 | -8.2 | -9.5 | -11.0 | -8.8 | -9.6 | -7.1 | -6.3 | … | |||
| Gross international reserves | |||||||||||||||||
| In millions of US$ | 1,367 | 1,440 | 1,440 | 1,553 | 1,207 | 1,643 | 1,654 | 1,461 | 1,463 | 1,598 | 1,556 | 1,654 | 1,834 | 1,834 | |||
| In months of next year’s imports | 4.4 | 5.8 | 5.8 | 4.6 | 4.0 | 5.5 | 4.6 | 4.3 | 4.3 | 4.4 | 4.2 | 4.1 | 4.2 | 4.2 | |||
| Memorandum items: | |||||||||||||||||
| GDP at current market prices | |||||||||||||||||
| Rwanda francs (billion) | 9,045 | 9,105 | 9,105 | 10,313 | 9,894 | 9,841 | 11,688 | 10,629 | 10,641 | 12,043 | 11,862 | 13,449 | 15,184 | 17,129 | |||
| Population (million) | 12.4 | 12.4 | 12.4 | 12.7 | 12.7 | 12.7 | 13.0 | 13.0 | 13.0 | 13.3 | 13.3 | 13.6 | 13.9 | 14.2 | |||
Overall deficit excl. spending on materialized contingent liabilities and other items already incl. in the DSA.
The PCI is available to all IMF members that do not need Fund financial resources at the time of approval. It is designed for countries seeking to demonstrate commitment to a reform agenda or to unlock and coordinate financing from other official creditors or private investors