IMF Executive Board Completes Fourth PSI Review for Rwanda

The Executive Board of the International Monetary Fund (IMF) today completed the fourth review of Rwanda’s economic performance under a three-year program supported by the IMF’s Policy Support Instrument (PSI)[1].

The PSI for Rwanda was approved on December 2, 2013 (see Press Release No.13/483).

Following the Executive Board discussion, Mr. Min Zhu Deputy Managing Director and Acting Chair, made the following statement:

“Rwanda has a track record of strong policy performance that has led to sustained high growth, progress in reducing poverty, and a stable macroeconomic situation. Growth in 2015 was slightly stronger than expected and inflation remained contained. Revenue collection and budget execution were broadly in line with expectations.

“However, the growth outlook for 2016–17 has become more uncertain, due to recent declines in international commodity prices. These have already reduced Rwanda’s export receipts and, combined with appreciation of the U.S. dollar, has created strong downward pressure on the exchange rate.

“The authorities’ planned policy response is to continue to allow exchange rate flexibility to function as the central tool for adjustment, supported by modest tightening of the monetary stance, with frontloaded provision of donor assistance and some additional use of international reserves to cushion the immediate impact. However, the authorities should consider contingency plans for further fiscal and monetary adjustment, should the shock persist longer or intensify more than expected. Careful monitoring will be needed over the next months to determine whether additional tightening may be needed, including to avoid undue pressure on the exchange rate or depleting reserve buffers. Re-building reserve buffers will be critical to enhance the country’s resilience to future shocks.

“Over the medium term, policies should remain focused on sustaining high growth through growth-enhancing public investment, encouraging private investment, and diversifying exports. The authorities plan to restore fiscal buffers by reducing the deficit via higher revenue collection, improved public spending efficiency and cautious borrowing, underpinned by medium-term fiscal consolidation. In addition, reforms to expand access to financial services and deepen financial markets will provide needed capital for private sector-led growth and enable Rwanda’s integration in larger markets within the East African Community.”

[1]The PSI is an instrument of the IMF designed for countries that do not need balance of payments financial support. The PSI helps countries design effective economic programs that, once approved by the IMF’s Executive Board, signal to donors, multilateral development banks, and markets the Fund’s endorsement of a member’s policies (see Details on Rwanda’s current PSI are available at

Source: International Monetary Fund (IMF)

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