By David Himbara
General Paul Kagame needs more loans for RwandAir. We learn this from the International Monetary Fund (IMF) — thanks to its surveillance oversight. Member countries, Rwanda included, are legally bound to submit comprehensive economic and financial data to the IMF under what is known as the Articles of Agreement, in particular, Article VIII, Section 5.
This is the legal framework which empowers the IMF to require information from members. It is through this window that we get a glimpse of the RwandAir problem. Kagame is seeking IMF’s approval to borrow millions of dollars in new loans to sink into RwandAir.
Rwanda’s breached the IMF agreement with RwandAir loans
In its ”Ninth Review Under The Policy Support Instrument” dated May 23, 2018, the IMF shows that Rwanda breached the agreed debt ceiling by acquiring a loan for RwandAir:
Continuous targets were met except, for the indicative ceiling on new external debt contracted by public enterprises. The US$500 million ceiling was exceeded by US$87 million (1 percent of GDP) in early 2018, due to a lease signed by Rwandair earlier than expected to obtain planned aircraft on more favorable terms. The authorities propose to raise the indicative ceiling to US$800 million to accommodate this and potential other leases to replace existing aircraft.”
From this, we learn that the Kagame regime intends to raise even more loans for RwandAir. That is why the regime is asking the IMF to allow it to borrow bigger amounts of money for public enterprises. Specifically, the regime seeks IMF’s permission to borrow up to US$800 Million as opposed to the current ceiling of US$500 Million for public enterprises — the code name for RwandAir. The airline will sink Rwanda sooner or later.
On a different topic, we get an insight from the IMF on how Kagame’s latest vision is unfolding.
Of Kagame’s Vision 2050, IMF says:
”Looking forward, the authorities’ “Vision 2050” to reach middle income status by 2035 will require continued reform efforts to create higher value added economic activity, with the private sector serving as the main engine of growth. In addition, renewed momentum in domestic revenue mobilization will be necessary to support development spending.”
Things don’t sound great though at the moment. The ”pace of recovery of domestic demand is still uncertain, with still low private sector credit growth.”
Be that as it may, Kagame’s Vision 2020 is no more. Here comes Vision 2050. When Kagame celebrates his achievements in 2050, he will be 92 years old — and still in power. But for now, Kagame is preoccupied with his RwandAir. Kagame needs IMF’s approval to raise and sink more loans into RwandAir.
