Africa-Press – Rwanda. Rwanda’s economic growth projection has been revised upwards to 10.2 per cent from a previous 5.1 per cent set earlier in the year, a recent International Monetary Fund mission noted. Rwanda’s economy contracted by 3.4 per cent in 2020 as a result of the covid-19 pandemic.
The IMF mission, led by Haimanot Teferra, held virtual meetings with the Rwandan authorities between October 18 and November 15 and thereafter concluded that the outlook will benefit from positive spillovers from the global recovery.
“The economy is projected to rebound strongly in 2021, helped by sustained fiscal stimulus and an accelerated vaccination rollout. As a result, the output gap is expected to be closed by early next year,” the IMF noted.
The IMF noted that the growth was driven by unprecedented policy support, robust remittances, efforts to step up the vaccination rate as well as progress in structural reforms are supporting economic recovery in 2021.
The assessment also found Rwanda’s banking system to be stable, liquid, and well-capitalize while non-performing loans remained relatively as a resort of policy support and moratorium measures which had been set up. “The authorities should continue with intensive monitoring of credit risk and prudent loan classification and provisioning,” the post engagement summary noted.
The IMF noted that going forward, Rwanda’s monetary policy should remain data-dependent, guided by inflation expectations, and supportive of the economic recovery.
“With economic activity rebounding and rising commodity prices, headline inflation is projected to rise towards the target, which supports maintaining the current monetary policy stance. The authorities should closely monitor developments to inform the need for adjustment of the policy interest rate in line with the inflation outlook to ensure that monetary policy supports the recovery,” the institution further noted.
Among aspects that drive the projected growth include recovery and growth of exports by 58.8 per cent in the third quarter of 2021 driven by rising commodity prices, good performance of domestic manufacturing activities as well as horticulture.
Traditional exports grew by 43.1 per cent (coffee, tea, minerals) and a 47.5% growth in non-traditional exports (Manufactured products and horticulture).
At the recent Monetary Policy Stability Committee meeting, Central Bank Governor John Rwangombwa had predicted a revision of the economic growth projection based on economic recovery characterized by a GDP growth of 20.6 per cent recorded in the second quarter of 2021.
Among the factors building confidence on a strong position at year end include low inflation which saw the Central Bank maintain an accommodative monetary policy stance by keeping the Key Repo Rate at 4.5 percent to continue supporting the economic recovery efforts. Maintaining its key repo rate at 4.5 per cent, is a signal to encourage continued lending to the private.
Speaking on 23rd November at the launch of an by the Development Bank of Rwanda and the European Investment Bank, Finance and Economic Planning Minister, Dr. Uzziel Ndagijimana said that so far, policy and other interventions had managed to keep the economy on the recovery path.