The International Monetary Fund says Rwanda’s growth momentum remains strong, “notwithstanding the challenging external environment,” and projects its real GDP is projected to grow by 8.3 per cent in 2024.

This was disclosed in a statement Tuesday evening.

From October 7 to October 20, 2024, an IMF team led by Ruben Atoyan discussed with the authorities’ policy priorities and progress on reforms within the context of the fourth review of Rwanda’s Policy Coordination Instrument and Resilience and Sustainability Facility and the second review of the Stand-by Credit Facility arrangement. 

Consideration by the board is tentatively scheduled for December 2024. 

Upon completion of the review by the executive board, the IMF stated that Rwanda would have access to SDR 71.8 million (equivalent to about $95 million) under the RSF and SDR 66.75 million (equivalent to about $89 million) under the SCF.

“Rwanda’s growth momentum remained strong, notwithstanding the challenging external environment. Real GDP is projected to grow by 8.3 per cent in 2024, driven by strong performance of the services and construction sectors, and recovery in food crop production,” said the IMF statement. 

It added, “Inflation stabilised within the central bank’s target range, owing to appropriately tight monetary policy and favourable developments in food prices. The current account deficit widened due to high capital goods imports and low coffee exports.”

According to the global financial institution, the Rwandan franc depreciated by 6.6 per cent against the US dollar in January-October, a necessary step towards facilitating the much-needed external adjustment. The country’s international reserves stood at 4.5 months of prospective imports at mid-2024, providing a buffer against external shocks.

“Despite the challenging environment, macroeconomic policy performance through end-June 2024 remained in line with program objectives under the PCI/SCF arrangement. All quantitative targets were met, and reforms to enhance the transparency of public investments and strengthen FX market functioning are progressing well. 

“The authorities’ commitment to implement climate-related reforms under the RSF arrangement remained strong, with measures to implement climate budget tagging, improve the climate resilience of public investment, adopt sustainability disclosure standards, and develop a green taxonomy being on track to be completed in the coming weeks,” the IMF board explained.

While Rwanda’s economic outlook “continues to be positive,” the statement pointed out that “risks remain tilted to the downside.”

It also mentioned that “deepening of geopolitical fragmentation, another spike in global energy and food prices, or slowdown in trading partners’ growth would weigh on the outlook and adversely affect the availability of external financing.” 

It noted that recurrent shocks in recent years complicated the authorities’ objective to rebuild policy buffers. Fiscal consolidation has been slower than envisaged under the program, failing to halt the continued increase in the public debt-to-GDP ratio, expected to reach 80 per cent of GDP in 2025.

Increased access to concessional financing is welcomed as it creates an opportunity to implement critical reforms but does not substitute for domestic revenue mobilisation. 

Accelerating domestic revenue mobilisation, expenditure rationalisation, and mitigating fiscal risks from state-owned enterprises will be critical to preserving Rwanda’s policy space to react to shocks and achieve its development objectives.