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Rwanda has secured $204 million from the International Monetary Fund (IMF) to shore up foreign reserves which are under pressure due to falling exports worsened by increasing imports and a firming dollar against the franc.
The standby credit facility which was approved on Wednesday by the IMF’s executive board comes on the backdrop of declining Rwanda reserves for two consecutive years.
“The SCF (standby credit facility) will complement the (Rwandan) authorities’ efforts to address growing external imbalances, by boosting reserves,” said the IMF in a statement.
The board of the IMF immediately made available $102 million for withdrawal.
The latest data from Rwanda’s Ministry of Finance and Economic Planning indicates that the foreign reserves reduced by $32 million in 2015 —meaning they covered only 3.6 months of imports from the 4.8 months in 2013.
The commercial banks operating in Rwanda also took a hit from the worsening current account balance after recording 70.5 per cent decrease in foreign assets. In absolute terms, the lenders assets decreased by $39 million in the 12 months to December 2015.
“The situation has grown more challenging in recent months due to external shocks related to commodity prices and tighter conditions for private inflows. Combined with the appreciation of the US dollar, these have reduced export receipts and put downward pressure on the exchange rate and official reserves,” said the IMF.
The IMF notes that the downside risks to growth remain should further shocks to commodity prices or regional and weather-related developments materialize.