The International Monetary Fund’s latest review of Rwanda does two things, namely, shows how the Covid19 pandemic has ravaged the country and advises on how to rebuild the economy. Regarding the impact of the Covid19 pandemic, the growth rate has plummeted to negative, debt as a percentage to GDP has increased, as has the fiscal deficit. As for the rebuilding process, the private sector has to lead, while containing the state-owned enterprises and associated debts.
On how the Covid19 has ravaged Rwanda, the IMF highlights the following factors:
- The COVID-19 pandemic continues to take a heavy toll on Rwanda’s economy and society;
- The near-term outlook remains highly uncertain;
- Growth is expected to contract to negative at 0.2 percent in 2020;
- Fiscal deficit is expected to rise to 8.5 percent of GDP in 2020/21;
- Public debt is projected to reach 67 percent of GDP at end-2020.
How will Rwanda overcome this crisis? The IMF emphasizes three things:
- The government has to contain the debts of state-owned enterprises and state-guaranteed loans;
- The government has to improve governance and become transparent in its economic reform and the associated legislation;
- Above all, Rwanda has to accelerate the transition to a private sector-led growth and development;
The question is – is the regime of General Paul Kagame capable of promoting the private sector? Can the regime tame state-owned enterprises, the ruling party’s business empire, and military companies that make it nearly impossible for private sector operators to compete? These are old and unanswered questions.