A farmer ploughs a field: Fertilizer inputs are set to become a key component of Rwanda’s agricultural spending.
KIGALI — Rwanda is pursuing a dual strategy to strengthen its economy: boosting agricultural productivity while mitigating the impact of rising global oil prices, both key to managing inflation.
Agriculture is a central pillar of Rwanda’s economy, contributing about 29 percent of GDP and employing nearly 70 percent of the population. Ensuring access to fertilizers and other inputs helps sustain crop yields, stabilize food supply, and support household incomes. This also helps curb rising food prices.
Fertilizer costs are expected to rise due to higher global energy prices and supply chain disruptions. Officials have not clarified whether support will come in the form of subsidies or other interventions. The sector remains a focus of government investment and a key shock absorber for the economy.
Agriculture also underpins Rwanda’s export earnings. Key agricultural exports include coffee, which earned $486 million in 2025, and tea, which brought in $134 million, according to the Ministry of Finance. Minerals such as tin, tungsten, and tantalum contributed another $315 million, highlighting the sector’s importance for foreign exchange earnings.
Rising prices on oil products continue to push inflation higher in Rwanda.
Rising oil prices—driven by the war in the Middle East and supply constraints—pose a major risk to Rwanda’s economy and inflation. Oil affects transport, energy, and the cost of imported goods, pushing up prices across the board. The government is deploying fiscal and monetary measures, including targeted energy pricing strategies and tighter monetary policy, to shield households and businesses.
“By strengthening agriculture and carefully managing energy costs, Rwanda is building resilience into the economy,” Finance and Economic Planning Minister Yusuf Murangwa said. “We remain cautiously optimistic about sustaining growth despite these global pressures.”
Rwanda has reached an agreement with the IMF on a $250 million Extended Credit Facility program, equivalent to SDR 185 million, to support these efforts. The 38-month program aims to sustain growth, manage fiscal and debt risks, and reinforce private-sector-led development. It is expected to go before the IMF Executive Board for approval in June 2026.
Inflation remains a pressing concern, reaching 9.2 percent in February 2026, above the National Bank of Rwanda’s preferred 2–8 percent range. Rising energy and utility costs are the main drivers, while food prices remain pressured by erratic rainfall and higher agricultural input costs. Strengthening agriculture and targeted fiscal measures are part of the broader plan to stabilize prices.
On the monetary side, the National Bank of Rwanda has raised its policy rate to 7.25 percent to anchor inflation expectations and prevent second-round price effects. Greater exchange rate flexibility is also being used to absorb external shocks and support foreign exchange reserves, which currently cover over four months of imports.
The IMF-backed program focuses on three pillars: strengthening macroeconomic policy coordination, managing fiscal and debt risks, and advancing private-sector-led growth. A key component is the Medium-Term Revenue Strategy (MTRS-2), designed to boost domestic revenues and reduce reliance on external borrowing.
Finance Minister Murangwa expressed confidence in Rwanda’s outlook despite the challenges. “We welcome the ECF program, which will help Rwanda weather the Gulf war’s impact and reduced budget support while sustaining growth, investment, and structural transformation,” he said.
Analysts say Rwanda’s policy mix of concessional borrowing, targeted sector support, and ongoing reforms provides a credible path to maintaining stability while sustaining growth. By investing in agriculture and shielding the economy from oil shocks, Rwanda is strengthening resilience and protecting households amid global uncertainties.
