According to the IMF, Rwanda's economy expanded by 8.9 percent in 2024, driven by a rebound in agriculture and continued strength in services and construction. Inflation remained contained within the National Bank of Rwanda's target range of 2 to 8 percent, supported by prudent monetary policy and improved domestic food supply.
Despite the widening of the current account deficit, mainly due to a surge in consumer and capital goods imports, the country's foreign exchange reserves remained adequate, covering 4.7 months of imports by the end of 2024.
The IMF warned, however, that Rwanda's fiscal position faces growing pressure, particularly from large-scale investments in the new Kigali International Airport, the expansion of national carrier RwandAir, and recent pension reforms. Public debt is now projected to peak in the 2025/26 fiscal year, with the PCI debt anchor expected to be reached by 2033.
'Sustaining fiscal consolidation remains vital to preserving macroeconomic stability and ensuring debt sustainability,' said IMF Deputy Managing Director and Acting Chair, Bo Li.
'The recently adopted tax reform package is a welcome step toward broadening the tax base and enhancing equity and efficiency.'
The Fund emphasised the importance of accelerating domestic revenue mobilisation and maintaining a credible path to fiscal consolidation. It also urged vigilance over fiscal risks, especially those stemming from state-owned enterprises (SOEs), increasing debt service costs, and limited access to concessional financing.
Monetary policy was credited for helping to keep inflation in check, but the IMF stressed that a data-driven approach would be essential moving forward, especially in light of potential inflationary pressures from fiscal loosening and tax reforms. Greater exchange rate flexibility and ongoing improvements to the foreign exchange market were identified as key to external adjustment.
The Fund also highlighted the need for enhanced oversight of credit growth, including in the microfinance sector, and closer monitoring of large exposures to safeguard financial stability.
Rwanda was praised for strong program implementation under the PCI, having met all quantitative targets and completed most structural benchmarks. Notable achievements included advancements in SOE governance, public financial management (PFM) digitalisation, and monetary statistics.
IMF noted that the two remaining structural benchmarks, approval of a comprehensive tax policy package and rollout of the Global Master Repurchase Agreement, were completed with delays.
On climate-related reforms, the IMF acknowledged Rwanda's continued momentum, noting significant progress in climate budget tagging, green taxonomies, and the development of a climate finance agenda. The Fund encouraged further work in developing a pipeline of viable green projects to attract climate finance and support the country's sustainability goals.
'Continued commitment to reform and strong engagement with development partners will be critical to sustaining progress and supporting Rwanda's ambitious development agenda,' the IMF stated.
The IMF Executive Board statement comes two months after the conclusion of a two-week mission, led by Ruben Atoyan, that assessed the country's reform progress under the fifth review of the Policy Coordination Instrument.
Wycliffe Nyamasege
Source : https://en.igihe.com/economy/article/imf-hails-rwanda-s-strong-economic-growth-and-reform-progress
