Led by Ruben Atoyan, the IMF team held discussions with Rwandan authorities from March 24 to April 4, 2025, and reached a staff-level agreement, affirming the country's strong economic fundamentals and commitment to structural reforms despite a challenging global economic environment.
Rwanda recorded an impressive GDP growth rate of 8.9% in 2024, making it one of the fastest-growing economies in sub-Saharan Africa. The growth was fueled by strong performances in agriculture, construction, trade, tourism, transport, and telecommunications sectors. Labour market indicators also improved, with increased participation and a reduction in the unemployment rate.
Inflation remained stable at 4.8% by the end of 2024â€"within the National Bank of Rwanda's target rangeâ€"thanks to improved food production and effective monetary policy.
The fiscal deficit was lower than anticipated, as the government collected more tax revenues than projected and implemented well-targeted capital spending and VAT refunds.
Rwanda's financial sector was described as sound, with robust credit growth and a decline in non-performing loans. The country also saw external pressures ease, with Q4 exports improving and sustained inflows from development partners helping to stabilise the Rwandan franc, which depreciated by 9.4%â€"a marked improvement from 18% in 2023.
International reserves rose to the equivalent of 5.4 months of import cover, reinforcing Rwanda's ability to withstand future external shocks.
'All quantitative targets under the PCI were met,' Atoyan noted, adding that key structural reformsâ€"particularly in domestic revenue mobilisation, state-owned enterprise oversight, corporate governance, and transparency in financial statisticsâ€"were successfully implemented.
The IMF also highlighted the February 2025 completion of Rwanda's Standby Credit Facility (SCF), which was instrumental in addressing external imbalances and shoring up foreign reserves.
Looking ahead, the IMF welcomed Rwanda's newly approved tax package, which is expected to further boost domestic revenue and increase the tax-to-GDP ratio.
Some of the new taxes approved by the Cabinet in February include a 15% excise duty on cosmetic and beauty products, a 15% adjustment in the fuel levy per litre, and an 18% Value Added Tax (VAT) on mobile phones. There is also an increase in taxes on gambling activities, with the tax on Gross Gambling Revenue (GGR) rising from 13% to 40%, and the withholding tax on winnings increasing from 15% to 25%. A tourism levy was also introduced, among other fiscal measures.
Major strategic projectsâ€"including the second phase of Bugesera International Airport and the expansion of RwandAir, in partnership with the Qatar Investment Authorityâ€"are set to reinforce long-term growth and enhance regional connectivity.
The IMF Executive Board is expected to consider the fifth review of Rwanda's PCI in May 2025.
The PCI was introduced in December 2022 to support Rwanda's reform agenda without requiring financial resources from the IMF.
IGIHE
