- Government expects IMF to agree $200 million facility in June
- Current account-deficit seen widening as export revenue drops
Rwanda is in talks with the International Monetary Fund to arrange a standby facility of about $200 million to help offset the impact of declining export revenue and surging imports, Central Bank Governor John Rwangombwa said.
The collapse in global commodity prices is expected to result in “negative growth” in revenue for Rwanda’s mineral shipments this year, Rwangombwa said in an interview Friday at the World Economic Forum on Africa in the capital, Kigali. At the same time, import costs are surging as the government spends money building infrastructure like roads, railways and a new international airport.
“We have started engaging the fund,” Rwangombwa said. “We expect the IMF through their board to approve by next month a financing standby facility for Rwanda. We are looking at around $200 million.”
Rwanda’s economy recorded one of the fastest growth rates in Africa over the past 10 years, expanding an average of 7.8 percent, according to World Bank data. Only Ethiopia and Sierra Leone grew faster. The government is investing in infrastructure to help develop private industry, two decades after a genocide in the East African left more than 800,000 dead and slashed economic output by almost 50 percent.
Rwanda’s “unfavorable” trade account balance has weighed on the Rwandan franc, which has weakened about 4.2 percent against the dollar this year, as well as growth. The economy is only expected to grow 6 percent this year, before accelerating to 7.5 percent by 2018, Rwangombwa said.
Growing imports are expected to result in an even wider current-account deficit, he said. Rwandan imports of goods including construction and transport materials last year totaled $1.86 billion, compared with exports including tin, coltan, coffee and tea worth $563.46 million, according to National Institute of Statistics of Rwanda data. The current-account gap stood at $945.4 million in 2014, according to the latest available data on the central bank’s website.
The deficit on the current account, the broadest measure of trade in goods and services, has “always” been between 11 and 12 percent of gross domestic product in Rwanda, Rwangombwa said.
“This year we expect it to widen further because of very big imports,” he said. “This widens it to more than 16 percent. We expect that to go down next year back to 10 percent.”