Goal-setting, public accountability and broad ownership of policies has helped the country emerge as one of the fastest-growing economies in Sub-Saharan Africa.
However, financing the achievement of the UN’s Sustainable Development Goals within the country will be “challenging”, the Washington-based fund has warned.
“Rwanda has made notable progress in reaching its development objectives,” said Tao Zhang, the IMF’s deputy managing director.
“Rapid and inclusive growth has been based on a combination of strategic goal-setting, public accountability, and broad ownership of policies.
“This was supported by strong macroeconomic performance and rapid responses to shocks, for example, the recent exchange rate adjustment that helped align the external position with fundamentals.”
In their latest ‘Article IV’ review of the country’s economic performance, fund economists indicate that growth in Rwanda has been inclusive and that extensive investment in social safety nets has reduced poverty significantly.
Zhang added that growth in 2018 was stronger than expected at 8.6%, led by construction and services, and should remain at about 8% in 2019.
Inflation has been below the authorities’ targeted band for several months, prompting the central bank to lower its policy rate in May, although it is expected to rise later this year.
The current account deficit is expected to increase in 2019–20 due to airport construction, and decline thereafter.
Rwanda’s authorities are requesting the approval of a three-year programme under the IMF’s Policy Coordination Instrument to support their National Strategy for Transformation aiming to make progress towards achieving the SDGs.
This would seek to recalibrate fiscal objectives, bolster domestic revenues, improve public financial management, and support Rwanda’s monetary policy framework.
Zhang added: “The new PCI-supported programme supports Rwanda’s National Strategy for Transformation while safeguarding external and debt sustainability.
“Going forward, the NST aims to make progress toward the Sustainable Development Goals and help crowd in the private sector as an engine for growth. However, financing the strategy will be challenging.”
