IMF says Rwanda economy to expand by 6.5 per cent this year

IMF says Rwanda economy to expand by 6.5 per cent this year
Rwandan troops

Rwanda's economy is expected to grow by 6.5 per cent this year from 7.0 per cent in 2014, while inflation will remain contained, the International Monetary Fund said on Thursday.

Rwanda's government has said last year's economic growth was buoyed by robust expansion in farming, services and industrial sectors, rising from 4.6 per cent in the previous year.

The east African nation's 2013 growth suffered from cuts in budgetary support by donors, after United Nations monitors accused it of backing rebels in the neighbouring Democratic Republic of Congo. Rwanda rejected the claims.

The IMF however said Rwanda's revenue collection and exports remained below the government's target.

"The two aspects that were not so positive were the revenue mobilization effort by the government, which was below what the government wanted it to be, and export performance," the IMF Mission chief Paulo Drummond told Reuters in Kigali after a visit to review the country's economy.

"Looking at 2015 we think the outlook is quite stable. The economy will benefit from lower oil prices. It's an oil importing country. We expect growth in 2015 to be 6.5 per cent." Drummond said inflation would remain low this year.

"We expect inflation by the end of the year to remain low... we are thinking about around 3.5 per cent," he said. Rwanda has said inflation is not expected to exceed 3.5 per cent by the end of 2015.

Urban inflation, the main rate the bank watches for monetary policy purposes, stood at 0.7 per cent in February from 1.4 per cent in the previous month. Rwanda is among the economies in the region that investors have hailed for solid fundamentals, including low debt and inflation.

It sold US$400 million (S$545 million) in a heavily subscribed debut Eurobond in 2013. The growth rate averaged 8.2 per cent from 2006 to 2012 in the landlocked state that has become a favourite with international investors two decades after the 1994 genocide.

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