Rwanda will get up to $310 to fund climate resilient programs.
Rwanda is expected to access funds under the newly negotiated Resilience and Sustainability Facility (RSF) amounting to $310million in concessional financing towards building resilience against climate change in the country.
The RST facility, an International Monetary Fund program aimed at helping low-income and vulnerable middle-income countries build resilience to external shocks and ensure sustainable growth, contributing to their longer-term balance of payments stability.
This comes after an International Monetary Fund (IMF) mission, led by Haimanot Teferra, held meetings with the Rwandan authorities in Kigali during September 26 – October 7, 2022, to discuss Rwanda’s request for support under the facility and an accompanying new 36-months Policy Coordination Instrument (PCI)- with a requested access of 150 percent of quota ($310million).
The PCI would support the authorities in their efforts to build on the progress in macroeconomic, fiscal, and financial reforms started under the PCI that was approved in 2019.
The IMF statement said that the RSF financing will help Rwanda’s advance their efforts in building resilience against climate change but the agreement is subject to approval by the IMF Management and Executive Board. Consideration by the Board is tentatively scheduled for December 2022.
The total will be directed to three areas- Rwanda’s identified Nationally Determined Contributions mitigation measures through 2030 is estimated to get around $5.7 billion, over $5.3 billion for adaptation priorities, representing a combined funding requirement of around 11 billion USD.
The Rwandan economy has been staging robust growth despite the unfavorable global environment. Staff estimates GDP growth at 6.8 percent in 2022.
Elevated global commodity prices and subdued domestic food production have pushed up inflation to 15.9 percent in August, prompting the central bank to raise the policy rate by 100 bps to 6 percent.
Fiscal performance for Fiscal Year (FY)2021/22 was in line with expectations. The financial system continues to be sound, liquid and well capitalized. The exchange rate has remained stable while reserves stood comfortably above 4 months of prospective imports.
“Looking ahead, addressing high inflation, long-term development needs, and emerging climate risks, remain a policy challenge in a highly volatile global environment. Sustaining the economy’s recovery will require a focus on policies to safeguard debt sustainability, increase fiscal and financial resilience to adverse shocks, as well as reforms to mitigate pandemic scarring and raise productivity growth,” Teferra said at the conclusion of the IMF Mission.
Minister of Finance and Economic Planning, Uzziel Ndagijimana noted that the facility will contribute to Rwanda’s objective of meeting its Rwanda’s Nationally Determined Contributions.
“We hope this Resilience Sustainability Trust facility will be a catalyst to attract additional funding from different sources, be it bilateral and multilateral means, private sector funding or issuance of a green bond,” Minister Ndagijimana said.
