Rwanda navigates headwinds to top regional growth table in 2024

June 5, 2025 in Finance, Infrastructure, Investment, Policy by Editor

The IMF, despite the resilience of the Rwandan economy, believes the fiscal position will be under pressure from the large infrastructure investment in the New Kigali International Airport and the expansion of RwandAir, as well as the recent pension reform.

The Rwandan economy expanded by 8.9 percent during 2024, driven by a rebound in agriculture and the continued strengthening in the services and construction sectors. This was the fastest growth amongst the East African Community member countries.

Inflation remained within the National Bank of Rwanda’s two to eight percent target band, reflecting tight monetary policy and improved domestic food supply. The current account deficit widened in 2024 due to strong consumer and capital goods imports, but reserves remained adequate at 4.7 months of imports as of end-year.

Following the latest review under the Policy Coordination Instrument (PCI), the International Monetary Fund (IMF) Mission said Rwanda’s economic growth remains among the strongest in sub-Saharan Africa.

This is despite rising fiscal and external pressures linked to large investment projects and reduced concessional financing. Continued fiscal consolidation, supported by stronger domestic revenue mobilization and spending efficiency, is essential to safeguard macroeconomic stability and debt sustainability.

In a statement during mid-week, the IMF said, “Rwanda’s economy has demonstrated impressive resilience, recording strong growth supported by robust activity in the services, construction, and agriculture sectors. Inflation has remained within the NBR target range, aided by prudent monetary policy and improved domestic food supply. However, the macroeconomic environment has become more complex due to a need to implement difficult reforms against the background of worsening external conditions, including aid withdrawals and regional tensions.”

Going forward, the fiscal position will be under pressure from the large infrastructure investment in the New Kigali International Airport and the expansion of RwandAir, as well as the recent pension reform.

Public debt is expected to peak in FY2025/26, with the PCI debt anchor now projected to be reached in 2033. Accelerating domestic revenue mobilization and maintaining a credible fiscal consolidation path are crucial to restoring policy space and ensuring long-term fiscal sustainability.

The IMF cautions that continued vigilance is needed to manage risks from state-owned enterprises (SOEs), rising debt service costs, and constrained access to concessional financing.

Monetary policy should remain data-driven to contain inflation and support external adjustment. Exchange rate flexibility will be essential to absorb shocks, while reforms to strengthen FX market functioning should continue. Close oversight of credit expansion—including in the microfinance sector—and improved monitoring of large exposures are important to safeguard financial stability.

However according to the IMF program implementation under the PCI remains strong. All quantitative targets were met and most structural benchmarks for this review were completed, including those on SOE governance, PFM digitalization, and monetary statistics expansion. The remaining two structural benchmarks on the Cabinet approval of the comprehensive tax policy package.

The IMF said, “Rwanda continues to advance structural reforms under the PCI, including improvements in SOE governance, public financial management digitalization, and financial sector statistics. Progress on climate-related reforms under the RSF is commendable. Looking ahead, Rwanda’s efforts to build a pipeline of bankable green projects and improve climate finance coordination will be instrumental in mobilizing additional resources. Continued commitment to reform and strong engagement with development partners will be critical to sustaining progress and supporting Rwanda’s ambitious development agenda.”