Rwanda plans extra 6.7% spending to shore up pandemic-stricken economy
Rwanda plans an additional 6.7% of spending in the current fiscal year, ending in June, as part of efforts to shore up an economy battered by the effects of the coronavirus-induced crisis. This was said by the country’s Finance Minister Uzziel Ndagijimana on Thursday.
The minister asked parliament to sanction 3.4 trillion Rwandan francs ($3.5 billion) additional spending on the 2020/2021 (July-June) budget. The request is likely to be approved as President Paul Kagame’s ruling party holds a parliamentary majority.
Rwanda’s economy, dependent on agriculture and services like hospitality, is projected by the International Monetary Fund to contract by 0.2% in 2020, hurt by effects of the coronavirus pandemic.
The IMF added in December that the economy will rebound this year and grow by 5.7%.
Ndagijimana said on Thursday the extra funding, geared to finance the country’s efforts to fight the coronavirus pandemic, will come from savings arising from the IMF’s debt relief program.
IMF country representative in Rwanda, Samba Mbaye, told Reuters that Rwanda, along with other low-income countries, has benefited from about $28 million in debt service relief on its IMF obligations since April 2020.
“This relief should help finance additional spending to mitigate the health and economic impact of the COVID-19 crisis,” he said, adding that the IMF will continue its fundraising efforts and will provide further debt service relief for a period of up to 24 months depending on the availability of resources.
The country’s debt rose an estimated 65.9% of GDP last year from 58.1% the previous year as the government stepped up borrowings to cushion the economy from the effects of coronavirus, said Calvin Djiofack Zebazethe, a World Bank’s senior economist.