Identifier
Created
Classification
Origin
09KIGALI348
2009-06-08 13:15:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Kigali
Cable title:
IMF CONDUCTS SUCCESSFUL SIXTH REVIEW
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UNCLAS KIGALI 000348
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: EAGR EAID ECON EFIN PREL RW
SUBJECT: IMF CONDUCTS SUCCESSFUL SIXTH REVIEW
UNCLAS KIGALI 000348
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: EAGR EAID ECON EFIN PREL RW
SUBJECT: IMF CONDUCTS SUCCESSFUL SIXTH REVIEW
1. (SBU) An IMF team successfully concluded its sixth review
of Rwanda's three-year Poverty Reduction and Growth Facility
(PRGF) program with a briefing for donor governments on May
29. The team found Rwanda had met all its 2008 PRGF
performance targets; some early 2009 fiscal targets were
missed due to late donor budget support payments. Robust
growth of 12.2 percent in 2008 was projected to drop to 5.3
percent in 2009. Continued strong growth in the agriculture
sector will be offset by declining growth in other sectors,
including construction, mining and services, as the world
economic downturn makes itself felt in Rwanda. While falling
exports are evident, tourism receipts are apparently holding
up -- a new system for measuring tourism receipts revised
those figures upwards.
2. (SBU) Inflation, after reaching 22 percent at the end of
2008, fell to 13.5 percent in April, and could be down to
single digits by later in the year. Domestic revenue will be
negatively affected by declining tax revenues and by East
African Community (EAC) integration -- and resultant decline
in tariff revenues -- which however will be partly made up by
payments from Common Market for Eastern and Southern Africa
(COMESA) compensation funds. To help offset projected
losses, fuel levies will be increased, and various fuel
subsidies reduced, as well as taxes increased on mobile phone
air time.
3. (SBU) The IMF team supported an increase in the budget
deficit in 2009/10 to preserve poverty reduction programs.
It also accepted a 10 percent salary increase for civil
servants. The team expressed some unease concerning a
proposed USD 30 million Chinese road maintenance loan, which
does not meet current concessionality requirements (the
Chinese loan has a 35 percent concessional component, versus
the PRGF's required 50 percent). The team sought donor views
on the impact of this projected loan on their own grant
funding. The IMF will also continue discussions on improving
banking sector liquidity.
4. (SBU) The Government of Rwanda (GOR) seeks a Policy
Support Instrument (PSI) starting in FY 2010/2011 -- a PSI is
a more flexible policy framework than a PRGF, offering IMF
support and endorsement without a borrowing arrangement. An
IMF team would send a mission to evaluate this request in
February or March of 2010, in advance of an IMF Board
decision in April 2010.
SIM
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: EAGR EAID ECON EFIN PREL RW
SUBJECT: IMF CONDUCTS SUCCESSFUL SIXTH REVIEW
1. (SBU) An IMF team successfully concluded its sixth review
of Rwanda's three-year Poverty Reduction and Growth Facility
(PRGF) program with a briefing for donor governments on May
29. The team found Rwanda had met all its 2008 PRGF
performance targets; some early 2009 fiscal targets were
missed due to late donor budget support payments. Robust
growth of 12.2 percent in 2008 was projected to drop to 5.3
percent in 2009. Continued strong growth in the agriculture
sector will be offset by declining growth in other sectors,
including construction, mining and services, as the world
economic downturn makes itself felt in Rwanda. While falling
exports are evident, tourism receipts are apparently holding
up -- a new system for measuring tourism receipts revised
those figures upwards.
2. (SBU) Inflation, after reaching 22 percent at the end of
2008, fell to 13.5 percent in April, and could be down to
single digits by later in the year. Domestic revenue will be
negatively affected by declining tax revenues and by East
African Community (EAC) integration -- and resultant decline
in tariff revenues -- which however will be partly made up by
payments from Common Market for Eastern and Southern Africa
(COMESA) compensation funds. To help offset projected
losses, fuel levies will be increased, and various fuel
subsidies reduced, as well as taxes increased on mobile phone
air time.
3. (SBU) The IMF team supported an increase in the budget
deficit in 2009/10 to preserve poverty reduction programs.
It also accepted a 10 percent salary increase for civil
servants. The team expressed some unease concerning a
proposed USD 30 million Chinese road maintenance loan, which
does not meet current concessionality requirements (the
Chinese loan has a 35 percent concessional component, versus
the PRGF's required 50 percent). The team sought donor views
on the impact of this projected loan on their own grant
funding. The IMF will also continue discussions on improving
banking sector liquidity.
4. (SBU) The Government of Rwanda (GOR) seeks a Policy
Support Instrument (PSI) starting in FY 2010/2011 -- a PSI is
a more flexible policy framework than a PRGF, offering IMF
support and endorsement without a borrowing arrangement. An
IMF team would send a mission to evaluate this request in
February or March of 2010, in advance of an IMF Board
decision in April 2010.
SIM