Rwanda’s economy remains strong and resilient, though higher fiscal and external pressures have challenged authorities’ effort to rebuild policy buffers. Credible fiscal consolidation—anchored in stronger domestic revenue mobilization, and spending efficiency—together with data-driven monetary policy and continued exchange rate flexibility are essential to safeguard macroeconomic stability and debt sustainability.
Program performance under the PCI has been strong, with all quantitative targets met and reforms implemented. As the PCI comes to a successful completion, the policy focus remains on implementing priorities under the Second National Strategy for Transformation, including advancing inclusive, climate-resilient growth and major infrastructure projects.
Washington, DC: On December 4, 2025, the Executive Board of the International Monetary Fund (IMF) concluded the 2025 Article IV consultation with Rwanda and completed the sixth review of Rwanda’s performance under the Policy Coordination Instrument[1] and considered and endorsed the staff appraisal without a meeting on a lapse-of-time basis.[2] The authorities have consented to the publication of the Staff Report prepared for the consultation and the review.
Despite repeated shocks, Rwanda’s economy has remained strong and resilient. Real GDP grew by 7.2 percent in 2024 and the first half of 2025—based on rebased GDP series—driven by robust activity in the services and construction sectors, and coffee exports. Inflation remained within the National Bank of Rwanda’s 2–8 percent target band, despite pressures from recently implemented tax measures. The current account deficit widened in the first half of 2025 due to strong consumer and capital goods imports, but international reserves remained adequate at 4.8 months of imports as of end-June 2025.
Going forward, Rwanda’s policy agenda should focus on sustaining macroeconomic stability and rebuilding buffers. Continued fiscal consolidation—supported by stronger revenue mobilization, spending efficiency, and improved SOE risk management—is essential to maintain debt sustainability and fund priority investments. A proactive, data-driven monetary policy and greater exchange rate flexibility will be critical to contain inflation and better absorb external shocks.
Program performance has been strong, with all quantitative targets met and reforms implemented. Since 2022, the PCI has supported Rwanda’s post-COVID recovery by anchoring the fiscal framework, advancing the forward-looking monetary policy, and preserving space for development priorities. Complemented by RSF and SCF financing, it strengthened resilience and helped safeguard macroeconomic stability. However, successive shocks and subsequent reconstruction needs, along with the financing of priority projects, have raised borrowing and kept pressure on external balances and buffers.
Executive Board Assessment
In concluding the 2025 Article IV Consultation with Rwanda, Executive Directors endorsed staff’s appraisal, as follows:
Rwanda is moving forward with its ambitious development plans, supported by a robust economy, despite constrained policy buffers and protracted external imbalances. The economy has maintained a strong performance and exhibited resilience despite encountering multiple shocks in recent years. Inflation remains within the NBR’s target band despite a temporary increase since April 2025. The construction of the New Kigali International Airport and the expansion of RwandAir, combined with increased foreign-financed capital spending and higher pension contributions, will result in a reduction of fiscal policy buffers even with higher revenues from the new tax package. In turn, the current account deficit is projected to increase due to higher imports associated with the construction of NKIA. Recent GDP rebasing has lessened the reported debt deterioration versus the fifth review.
Program performance has been strong, heralding a strong track record of policy implementation and structural reforms under the 2022–25 PCI. Except for one reform target, all the quantitative and reform targets under the sixth and final review were met. Notably, progress was made in both critical fiscal reforms and advancements within the monetary and financial sectors, which are expected to strengthen the foundation of macroeconomic policy in Rwanda moving forward. The PCI has served an essential role during consecutive shocks over the past three years, including navigating the post-COVID-19 pandemic era, the 2023 floods, the 2024 Marburg disease outbreak, and other global disruptions. As a result, the PCI has facilitated greater access to financing, particularly as the program nears completion with a rise in project loans, although these are increasingly offered on less concessional terms.
Fiscal pressures persist, indicating a need for increased revenue mobilization and stricter oversight of foreign-financed capital spending. The implementation of the new tax package will help sustain the tax-to-GDP ratio. Additionally, public sector efforts to improve investment management and public financial management reforms are underway to enhance spending efficiency and maximize returns on public investment. Nevertheless, borrowing for the NKIA project is expected to push public debt near 80 percent of GDP by 2027. Thus, sustained consolidation anchored in domestic revenue mobilization including identifying new revenue measures under MTRS-2, careful expenditure prioritization of capital spending, and expanded monitoring of fiscal risks will be essential to mitigate debt risks.
Against this backdrop, monetary policy should remain appropriately tight while the exchange rate should be used to absorb external shocks and facilitate necessary adjustments. Recent monetary policy tightening is appropriate, but further action may be needed if inflationary pressures intensify. The external adjustment should continue to be facilitated by greater exchange rate flexibility and price discovery given that Rwanda’s external position is substantially weaker than the level implied by fundamentals and desirable policies. Financial sector risks linked to strong credit growth require close monitoring. Potential asset quality issues and overleveraging should be managed through detailed risk assessments and targeted macroprudential measures.
The authorities’ initiative to align the NBR law with leading practices has been commendable though important shortcomings remain. The draft amendments submitted to Cabinet incorporate strong improvements in critical areas, including to strengthen provisions on the mandate, aspects of financial and personal autonomy, and transparency and accountability. However, the important remaining shortcomings with respect to central bank personal and institutional autonomy warrant further work and enhancements to better align with leading practices, including minimizing the scope for potential government influence over NBR policymaking.
Structural reforms should continue to aim at unlocking inclusive and durable growth. Reforms to support external balance can facilitate the development of a competitive and dynamic export sector. Policy priorities include supporting private sector development by reducing barriers to entry, strengthening regional trade integration to expand markets, improving infrastructure and interconnectivity to lower transport costs, and leveraging services such as travel and ICT for more sustainable export growth. Priorities also include raising export competitiveness with stronger regional integration. Continued efforts to advance climate projects will help attract further climate financing and strengthen resilience to climate shocks. Expanding women’s access to education and skills training is critical to broaden their participation in higher-productivity sectors and foster inclusive growth.
Staff support the completion of the sixth review of the PCI. The authorities have shown strong commitment to reforms, proven ability to implement difficult measures, and a solid track record of prudent policymaking.
Staff recommends the next Article IV consultation with Rwanda to be held on the 12-month cycle. Given that outstanding credit to the Fund exceeds the 200 percent of quota threshold, staff recommend initiation of a Post Financing Assessment (PFA).
Author:
MANZI
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