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International Monetary Fund. African Dept.
The COVID-19 pandemic is having an adverse impact on Rwanda’s economy, despite a sizeable policy response. Output in 2020 is projected to contract by 0.2 percent, compared to an 8 percent increase expected pre-pandemic. The government’s early actions helped contain the spread of the virus and mitigate its economic impact, supported by financing from Rwanda’s development partners, including from the IMF under the RCF. With the number of infections contained, the authorities are gradually easing up containment measures.
International Monetary Fund. African Dept.
COVID-19 has had a severe economic impact on Rwanda through the implementation of strict domestic measures to contain the spread of the virus and the related global spillovers. The authorities have responded by rolling out health and economic measures totaling USD 311 million (3.3 percent of GDP) to mitigate the impact on businesses and households. To help address the urgent balance of payments need arising from the pandemic, the Executive Board approved on April 2 and June 11, 2020 the authorities’ consecutive requests for emergency financing under the “exogenous window” of the Rapid Credit Facility (RCF) totaling SDR 160.2 million (IMF Country Reports No. 20/115 and No 20/207). This brings the total IMF COVID-19 support to Rwanda to 100 percent of quota, or USD 220.46 million.
Mindaugas Leika, Hector Perez-Saiz, Ms. Olga Ilinichna Stankova, and Torsten Wezel
The paper finds that supervisory stress tests are conducted in more than half of sub-Saharan African countries, particularly in western and southern Africa, and that the number of individual stress tests has grown exponentially since the early 2010s. By contrast, few central banks publish assessments of macro-financial linkages; the focus leans more toward discussing trends and weaknesses within the financial sector than on outside risks that may negatively affect its performance.
International Monetary Fund. African Dept.
This paper discusses Rwanda’s First Review Under the Policy Coordination Instrument (PCI) and Monetary Policy Consultation. Rwanda’s macroeconomic performance under the program remains strong. The PCI-supported program focuses on creating budget space for the implementation of Rwanda’s National Strategy for Transformation. The program also calls for improving fiscal transparency, boosting revenue, and supporting the implementation of the new interest rate-based monetary policy framework. Looking ahead, the fiscal deficit path is forecasted to adhere to the fiscal rule under the program, which provides space for the implementation of the National Strategy for Transformation (NST) while safeguarding debt sustainability. The government plans to finance the NST partly through public borrowing, which should continue to be supported by careful debt management. There are several plans underway to increase domestic revenues by boosting the registration of new taxpayers as well as through innovative schemes and greater use of technology to strengthen tax compliance. Further progress on identifying and managing potential government liabilities—so-called fiscal risks—will be important to ensure that public resources are well protected for use on priority spending.
Mr. Ales Bulir and Mr. Jan Vlcek
Does monetary policy react systematically to macroeconomic innovations? In a sample of 16 countries – operating under various monetary regimes – we find that monetary policy decisions, as expressed in yield curve movements, do react to macroeconomic innovations and these reactions reflect the monetary policy regime. While we find evidence of the primacy of the price stability objective in the inflation targeting countries, links to inflation and the output gap are generally weaker and less systematic in money-targeting and multiple-objective countries.
International Monetary Fund. African Dept.
This paper discusses Cote d’Ivoire’s Sixth Review Under the Arrangement of the Extended Credit Facility and the Extended Arrangement Under the Extended Fund Facility, and Request for Extension and Augmentation of Access. Côte d’Ivoire has been pursuing a development-oriented policy agenda, and the IMF-supported program in place since 2016 has supported that focus, paving the way for the private sector to become the main driver of growth. The performance under the program has been strong. The medium-term growth prospects remain robust, predicated on continuing prudent macroeconomic policy, furthering financial sector reforms and sustaining structural reforms to bolster private sector-led inclusive growth. Côte d’Ivoire’s reform efforts have resulted in improvements in its business climate in recent years. It will be imperative to continue the reform agenda to further stimulate private sector activity and support inclusive growth, including by improving the energy sector, human capital and financial inclusion, accelerating digitalization, enhancing trade connectivity and governance, expanding the coverage of social safety nets, and reinforcing the statistical apparatus to help better inform economic policy.