The Executive Board of the International Monetary Fund (IMF) on Thursday approved a US$109.4 million financing for Rwanda to go towards the fight against the new Coronavirus.
The amount drawn under the Rapid Credit Facility which will be disbursed immediately will support Rwanda’s efforts to stop the spread of COVID-19 and its impact on the economy.
IMF said the help addresses Rwanda’s urgent balance of payment needs stemming from the outbreak of the COVID-19 pandemic.
A statement released by the Washington D.C-based institution said that the economic impact of the COVID-19 pandemic is rapidly unfolding, with the near-term outlook deteriorating quickly. This has given a rise to significant fiscal and external financing needs.
“The authorities have acted fast by putting in place measures to help contain and mitigate the spread of the disease,”
“The RCF funds will support the authorities’ efforts by backstopping the decline in international reserves and providing financing to the budget for increased spending aimed at containing the epidemic and mitigating its economic impact,” the statement reads in part.
The Minister of Finance and Economic Planning Dr. Uzziel Ndagijimana told KT Press that the money will go towards the ongoing efforts to rein in the pandemic as the country continues to put in place strong measures to stop the spread of the virus.
“It is a financing facility from the IMF to support Rwanda’s efforts to stop COVID-19 and to mitigate its impact on the economy,” Dr Ndagijimana confirmed to KT Press.
“It is budget support that the Government will use to address health and socio-economic needs resulting from the pandemic,” he added.
The IMF said the additional financing also ought to help catalyse further assistance from the international community, preferably in the form of grants.
“The IMF continues to monitor Rwanda’s situation closely and stands ready to provide policy advice and further support as needed,” the statement said.
Tao Zhang, the Deputy Managing Director and Acting Chair of the IMF Executive Board, said the money will go towards resuscitating Rwanda’s economy which has been affected by COVID-19 measures.
“The COVID-19 Pandemic has ground Rwanda’s economy to a halt, creating an urgent balance of payments need. To contain and mitigate the spread of the virus, the government swiftly implemented measures that have affected all sectors of the economy,”
“With uncertainties surrounding the duration and spread of the pandemic, the economic fallout could intensify further,” he said.
Tao said the IMF emergency support under the Rapid Credit Facility will help with COVID19-related pressures on trade, tourism and foreign exchange reserves, and will provide much-needed resources for health expenditure and for households and firms affected by the crisis, adding that it should also help to catalyze donor support.
“A temporary widening of the budget deficit is appropriate to mitigate the health and economic impact of the pandemic. Spending should be well-targeted and cost-effective to not crowd-out other priority areas. Once the crisis abates, the fiscal adjustment path should be adjusted to preserve debt sustainability in the medium-term. Contingency plans should be prepared given the uncertain outlook.
“Monetary policy needs to be data-driven and the central bank should stand ready to provide additional liquidity support if warranted. A flexible exchange rate should be maintained as a shock absorber. The National Bank of Rwanda has taken various measures to help maintain the health of the financial sector and should continue to show flexibility, while encouraging prudent loan restructuring and stepping up reporting requirements.
“Additional donor support is critical to close the remaining financing gap, ease the adjustment burden, and preserve Rwanda’s development gains over the last two decades,” he observed.
Rwanda has so far registered 84 cases but no fatalities yet. However the two weeks lockdown which was extended by another 15 days yesterday is expected to hit had the country’s economy which had been predicted to grow by a double-digit this year.
The CEO of the Private Sector Federation Stephen Ruzibiza told KT Press that the private sector is expected to be the biggest causality of the COVID-19 effects, with the hospitality and service sectors already grappling with the impact.