Rwanda secures $262 million IMF credit facility amid climate shocks

The International Monetary Fund (IMF) and Rwanda have arranged a 14-month, $262 million credit facility to manage balance of payment pressures stemming from climate shocks, such as repeated droughts and severe floods in May 2023. The agreement was reached by an IMF team led by Ruben Atoyan and Rwandan authorities. The deal is critical for Rwanda’s flood-related reconstruction efforts and is set for IMF board consideration in December.

Despite a robust growth of 6.3% in the second quarter of 2023, Rwanda faces numerous challenges. These include increased food prices, global geopolitical tensions, and tight global financing conditions, in addition to the environmental crises. Substantial post-flood reconstruction costs are projected at 3% of GDP over the next five years.

To address these issues, a range of measures are being implemented. These include fiscal consolidation, proactive monetary policy, exchange rate adjustment, digital delivery of public services, enhanced efficiency of public investments, and nominal exchange rate flexibility. These measures are aimed at controlling inflation and improving debt sustainability.

Furthermore, amidst tightening global financing conditions and the aftermath of the COVID-19 pandemic, policies for second reviews of Rwanda’s existing Policy Coordination Instrument and a Resilience and Sustainability Facility program have been defined.

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