Rwanda and the International Monetary Fund (IMF) have reached an agreement to bolster the country's economy and ensure financial stability, the Rwandan Ministry of Finance and Economic Planning said in a press release on Tuesday.

This agreement includes measures aimed at addressing economic imbalances resulting from climate-related shocks and paves the way for financial support of about 262 million U.S. dollars through a new 14-month Stand-by Credit Facility (SCF).

The statement highlights the IMF mission team's recognition of Rwanda's resilience in the face of recent challenges, including droughts and severe floods. Despite these obstacles, Rwanda's economy continued to grow at a rate of 6.3 percent in the second quarter of 2023.

Ruben Atoyan from the IMF said "Despite the challenging environment, macroeconomic policy performance through end-June 2023 remained broadly in line with program objectives under the Policy Coordination instrument (PCI)." He emphasized the positive performance of Rwanda's macroeconomic policies, with most targets achieved and ongoing reforms to enhance domestic revenue, streamline expenditure, improve fiscal transparency and strengthen the foreign exchange market.

Nonetheless, the IMF mission stressed the need for continued efforts to address imbalances and ensure economic sustainability. This entails fiscal consolidation, data-driven monetary policy, and exchange rate adjustments to manage inflation and debt. It also underscored the importance of tax reforms to broaden the tax base and enhance compliance, in line with Rwanda's revenue objectives.

The statement further highlights the IMF mission's commendation of Rwanda's progress in addressing climate challenges under the Resilience and Sustainability Facility (RSF).

The agreement is pending approval by the IMF executive board in December 2023, which would provide Rwanda with access to 48.5 million U.S. dollars under the RSF and 87.5 million dollars under the SCF.