KIGALI – The International Monetary Fund (IMF) has confirmed Rwanda as the first nation in Africa to receive a loan to the tune of UGX416.157Bn to help the country deal with the impact of COVID-19.
The development was revealed by IMF through its Twitter handle noting that the IMF Executive Board had approved US$109.4 million disbursement to help Rwanda address the economic impact of COVID19, “This is the first COVID-19 emergency funding for an African country and we are working hard on other requests.”
IMF further explained why they came to Rwanda, noting that the economic impact of the COVID-19 pandemic is rapidly unfolding, with the near-term outlook deteriorating quickly and the authorities in Rwanda had acted fast by putting in place measures to help contain and mitigate the spread of the disease.
Rwanda will draw the US$109.4Million under the Rapid Credit Facility (RCF) and the funds will go towards meeting Rwanda’s urgent balance of payment needs stemming from the outbreak of the COVID-19 pandemic.
IMF further explained that the loan will support Rwanda’s 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.
IMF said it is also continuing to monitor Rwanda’s situation closely and stands ready to provide policy advice and further support as needed.
Tao Zhang, Deputy Managing Director and Acting Chair, while announcing the approval of the loan stated, that COVID-19 Pandemic has ground Rwanda’s economy to a halt, creating an urgent balance of payments need and in order to contain and mitigate the spread of the virus, the government swiftly implemented measures that have affected all sectors of the economy.
Zhang said, “With uncertainties surrounding the duration and spread of the pandemic, the economic fallout could intensify further.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. It should also help to catalyze donor support.”
The IMF also stated that the temporary widening of the budget deficit is appropriate to mitigate the health and economic impact of the pandemic and called on the Rwanda Government to ensure that spending is well-targeted and cost-effective to not crowd-out other priority areas.
However, the IMF loan is just a drop in the ocean into Rwanda’s financial woes, IMF encouraged the Paul Kagame administration to seek for additional funding to ensure the country’s Economy doesn’t sink.
“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,’ as noted by IMF.