IMF and Rwanda Reach Agreement on Fifth Policy Coordination Instrument Review Amid Economic Pressures
Written by Maxine Ansah
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The International Monetary Fund (IMF) has reached a staff-level agreement with the Government of Rwanda to complete the fifth review of the country’s Policy Coordination Instrument (PCI), following discussions held in Kigali from March 24 to April 4, 2025. This agreement outlines key policy measures Rwanda must continue implementing to maintain economic stability and manage rising fiscal pressures.
Despite a challenging global environment, Rwanda’s economy grew by a strong 8.9% in 2024, led by growth in services, construction, and agriculture. Inflation remained within the National Bank of Rwanda’s target range, thanks to tight monetary policy and stable food prices. However, the current account deficit widened due to a surge in imports, and the Rwandan franc depreciated by 9.4% against the U.S. dollar. Still, reserves remained healthy, covering 5.4 months of imports.
All performance targets under the PCI were met by the end of 2024. Reforms around domestic revenue mobilization, corporate governance for state-owned enterprises (SOEs), and financial data transparency have advanced. The IMF also noted that Rwanda is on track to improve the efficiency of its interbank market.
However, significant risks remain. Debt levels are expected to climb sharply—public debt is projected to reach 86.3% of GDP by 2026—mainly due to the costly Bugesera airport project. The IMF urged the government to fully implement new tax measures, reprioritize public investments, and strengthen oversight of SOEs and public-private partnerships to manage these fiscal risks.
Looking ahead, the IMF emphasized the importance of keeping monetary policy focused on controlling inflation while allowing for continued exchange rate flexibility. The Fund also encouraged Rwanda to deepen reforms linked to climate resilience, especially following the December 2024 completion of its Resilience and Sustainability Facility (RSF) program.
If approved by IMF management and the Executive Board in May 2025, the review will signal continued support for Rwanda’s reform agenda.
