The International Monetary Fund Executive Board has approved US$111.06 million, a second disbursement under the Rapid Credit Facility (RCF) bringing the total IMF COVID-19 emergency support to Rwanda to US$ 220.46 million to help urgent balance of payment needs stemming from the pandemic.
“Rwanda’s economy has been severely impacted by the COVID-19 pandemic with weaker domestic demand losses of revenue, and a sharp decline in exports and remittances; The additional resources under the RCF will help alleviate pressing financing needs, including for health, social protection, and supporting the most impacted sectors and vulnerable groups,” the IMF statement reads.
Rwanda currently has a total of 488 cases, 307 recoveries, and 2 deaths.
This is the second emergency disbursement Rwanda is receiving from the IMF since the onset of the pandemic following the initial disbursement on April 2, 2020.
“This will help finance the country’s urgent balance of payments (BOP) and budget needs. It follows from the Executive Board’s decision on April 9, 2020, to double the annual access limit under the RCF to 100 percent of quota and brings the total IMF COVID-19 support to Rwanda to $ 220.46 million,” the statement further indicates.
Rwanda’s economic outlook, IMF notes, continues to experience rough impacts due to “the unprecedented spending needs generated by the pandemic, combined with losses of revenues, which are putting significant pressures on public finances and compounding the impact of sharp declines of exports and remittances on the balance of payments.”
“The additional disbursement under the RCF will provide much-needed support for critical COVID-related spending under the government’s Economic Recovery Plan, but further support will be needed from the international community,” IMF notes.
Following the Executive Board discussion, Mr. Tao Zhang, Deputy Managing Director and Acting Chair, said that while the COVID-19 pandemic continues to severely impact the Rwandan economy, the global and domestic macroeconomic outlook has further deteriorated. Growth projections have been revised down, and revenue losses and spending needs are more than twice the size estimated at the time of the first RCF request.
Zhang further explained that the policy measures deployed by the authorities to respond to the pandemic and accelerate economic recovery are appropriate.
“The additional fiscal spending should help mitigate the impact of the pandemic while ensuring that spending is well-targeted and cost-effective so as not to crowd-out other priority areas. Additional financing from the international community remains critical to ease the adjustment burden,” he noted.
“It will also be important to maintain data-driven monetary policy and continue to provide liquidity support to cushion the impact of the pandemic as well as step-up supervision to safeguard financial stability,” Zhang added.