IMF completes Rwanda’s review, approves final disbursement of $26 million standby credit facility
The International Monetary Fund (IMF) Executive Committee has approved the extension of the eighth Policy Support Instrument (PSI) review and third and final disbursement of Special Credit Facility worth US$ 25.8 million.
In a statement released after the executive board’s decision, the IMF’s Deputy Managing Director and acting chair Mr. Tao Zhang said: “Rwanda’s Performance under the SCF arrangement and PSI-supported program has been strong and the country has made notable progress in reducing external imbalances which has helped safeguard macroeconomic stability and improved prospects for long term growth.”
In June 2016, in the face of external shocks to the economy, the IMF executive board approved an 18 months Standby Credit Facility worth US$ 204 million to offset the impact of low commodity prices by boosting Rwanda’s foreign reserves.
Reacting to the adoption of Rwanda’s reviews by the IMF Executive Board, The Minister of Finance and Economic Planning, Claver Gatete said: “Government appreciates the support of the IMF, as the Special Credit Facility and agreed policies under the PSI have allowed building reserves. Over the last 18 months, the government has been implementing policies towards reducing the trade deficit, including greater exchange rate flexibility, public spending restraint, prudent monetary policy and the “Made in Rwanda” policy to encourage domestic production of certain goods.”
The external account has registered an increase in coverage of reserves to above 4 months of imports, from 3.6 percent in 2015, following a strong improvement in exports of goods and a modest reduction in imports.
Under the Policy Support Instrument, Rwanda has been pursuing four pillars:Private sector development, exports promotion, domestic resource mobilization, and financial sector development.
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.