Rwanda Reaches $35.7M IMF Deal as Inflation Hits 15.7%

Rwanda has reached a staff-level agreement with the International Monetary Fund on the first review of its Extended Credit Facility programme, potentially unlocking about 35.7 million US dollars in financing for the East African economy.

The agreement was reached after an IMF mission led by Albert Touna Mama, the Fund’s mission chief for Rwanda, held discussions with the government between September 23 and October 6. The deal remains subject to approval by IMF management and the IMF Executive Board, which is expected to consider the review in December. The proposed disbursement amounts to SDR 26.433 million under the programme.

Rwanda’s economy grew 9.7 percent in the first half of 2026, supported by strong export earnings and remittance inflows, according to the IMF. The stronger external position helped narrow the current account deficit, while foreign exchange reserves remained equivalent to about four months of imports.

Inflation, however, remains a significant pressure point. Consumer price growth reached 15.7 percent in August, well above the National Bank of Rwanda’s medium-term target of 5 percent. The IMF attributed the elevated inflation to existing domestic price pressures as well as higher international oil and fertiliser prices.

The IMF said Rwanda met all quantitative performance criteria at the end of June, while authorities were advancing structural reforms covering the investment framework, domestic securities market and foreign exchange market.

Because inflation exceeded the programme’s consultation band, the Monetary Policy Consultation Clause will be discussed by the IMF Executive Board as part of the review.

Fiscal performance also remained strong, with Rwanda’s budget deficit narrowing to 4.8 percent of GDP in the 2025/26 fiscal year. Strong tax collection and the pass-through of higher international prices to fuel pump prices helped limit the cost of fuel subsidies.

The IMF said further fiscal consolidation would be needed to preserve Rwanda’s moderate risk of debt distress and rebuild policy buffers. It called for stronger domestic revenue mobilisation, including through the expected second Medium-Term Revenue Strategy, alongside tighter prioritisation of foreign-financed capital spending.

The Fund expects Rwanda’s economic growth to remain strong, projecting real GDP growth of 7.8 percent in 2026 and 7 percent in 2027.

Risks to the outlook include volatile global commodity prices, trade and geopolitical tensions, climate shocks linked to El Niño and tighter global financing conditions. The IMF said a new petroleum procurement framework led by the Rwanda National Energy Company could, on the other hand, improve fuel supply security and reduce procurement costs.

With inflation still high, the National Bank of Rwanda has tightened monetary policy. The IMF said monetary policy should remain sufficiently tight and data-driven to prevent current price pressures from spreading through the economy and to bring inflation back towards the 5 percent medium-term target.

Source: FSX Business News