Rwanda Secures $262 Million IMF Credit Facility Amid Climate Challenges

The International Monetary Fund (IMF) and Rwanda have established a 14-month, $262 million credit facility to help manage balance of payment challenges caused by climate-related shocks, including recurring droughts and severe flooding experienced in May 2023. The agreement was negotiated by an IMF team led by Ruben Atoyan, along with Rwandan officials. This arrangement is crucial for Rwanda’s reconstruction efforts following the recent floods and is expected to be reviewed by the IMF board in December.

Despite achieving a strong growth rate of 6.3% in the second quarter of 2023, Rwanda confronts various difficulties. These challenges consist of rising food prices, global geopolitical tensions, and stringent international financing conditions, compounded by environmental crises. The estimated costs for post-flood reconstruction are projected to reach 3% of GDP over the next five years.

To mitigate these challenges, a series of measures are being adopted, including fiscal consolidation, proactive monetary policies, adjustments to the exchange rate, digital delivery of public services, improved efficiency in public investments, and flexibility in nominal exchange rates. These strategies aim to control inflation and enhance debt sustainability.

Additionally, in light of tightening global financial conditions and the repercussions of the COVID-19 pandemic, policies have been developed for the second reviews of Rwanda’s existing Policy Coordination Instrument and a Resilience and Sustainability Facility program.