Kagame and the December 2023 IMF’s Rwanda Review – Himbara Challenged to Substantiate His Claims that the Report Paints a Negative Outlook

By David Himbara

Letter from Rwanda

Murunganwa aka Himbara, please substantiate your claims that the latest IMF’s Rwanda review was gloomy. To the contrary, the IMF’s review of our country was very positive. To quote from the IMF, “Rwanda’s economic growth remained robust.” That is why the IMF is supporting us with US$268 million credit. What do you say to this?

Response to the Letter from Rwanda

The International Monetary Fund announced on December 14, 2023, that it had approved a US$268 million stand-by credit for Rwanda. The IMF’s review begins with generalities such as “Rwanda’s economic growth remained robust” for which “the Rwandan authorities are to be commended.” But a closer look at the IMF’s December 2023 Rwanda Review reveals that General Paul Kagame’s regime is sitting on a powder keg. 1) The regime is unable to generate domestic revenues to advance its development agenda. 2) Foreign aid and donor soft loans that normally fill the gapping hole due to a funding squeeze. 3) Rwanda’s international reserves are shrinking as a result. 4) The outlook remains titled downside – the situation in Rwanda is more likely to deteriorate than improve.

Let the IMF speak for itself:

“Macroeconomic imbalances have intensified. Policy space to advance developmental objectives has been constrained by diminished policy buffers…The structural decline of external concessional financing have put pressure on the level of international reserves…The balance of risks to the outlook remains tilted to the downside…a funding squeeze would weigh on the outlook.”

What are the implications?

Most worrisome is the impact of Rwanda’s macroeconomic imbalances is the high food prices on a population that is already struggling to feed their families. Data from the National Institute of Statistics of Rwanda shows the disastrous situation facing Rwandans. The graphic below shows the urban, rural and national consumer price index skyrocketing, led by the rural communities where 82 percent of Rwandans live.

Urban, Rural and National Consumer Price Index, April 2023

Source: The National Institute of Statistics of Rwanda, https://www.statistics.gov.rw/publication/rwandas-inflation-193-pct-year-year-march-2023

It gets even worse. The increase in the prices of fresh products per The National Institute of Statistics of Rwanda was a whopping 53%. The World Bank ranks Rwanda among the top ten countries “hit hardest by food inflation.”

Source: World Bank, https://thedocs.worldbank.org/en/doc/40ebbf38f5a6b68bfc11e5273e1405d4-0090012022/related/Food-Security-Update-XCVII-December-14-23.pdf

The reports of the three institutions mean that Rwandan staples including bananas, plantains, pulses, sweet potatoes, beans, and cassava are out of reach for the 50% of Rwandans who live on less than US$2 a day.

Am I guilty of misinterpreting the December 14, 2023, IMF review of Rwanda’s current economic imbalances? Let the reader be the judge. Stay tuned.