President Paul Kagame personally took charge of the evaluation of the devastation, also comforting the affected
Rwanda Seeks $451m for Post-Floods Rehabilitation
Kigali – In a move to bolster the country’s resilience following the devastating May 2023 floods, the government intends to spend $451 million (Rwf617m) to deal with the consequences of the devastating floods in mid-last year.
The extensive post-flood reconstruction plan, detailed in a Letter of Intent to the International Monetary Fund (IMF), underscores the government’s strategic focus on rebuilding critical infrastructure and safeguarding the economy from further shocks.
“The floods not only destroyed homes and roads but also severely disrupted agricultural productivity, a key driver of our economy,” wrote Finance Minister Murangwa Yusuf and Central Bank Governor John Rwangombwa, to the IMF.
“This reconstruction plan is not just about recovery; it’s about building a resilient Rwanda capable of withstanding future climate shocks.” The government of Rwanda added.
In May 2023, following days of heavy rain, rivers such as the Sebeya in northwestern Rwanda burst their banks.
The government declared the zone uninhabitable after thousands had been left homeless to the point that as of December 2024, some people are still struggling to recover.
At the national level, bridges were washed away. Roads turned to mud pools. There were landslides. The authorities mobilized over Rwf110bllion for the reconstruction effort.
The government now says in the letter to the IMF that the funding allocation runs up to 2028, meaning it needs to find a similar amount every year to what it has already spent.
The announcement comes as Rwanda faces other challenges. Due to the impact of climate-related disasters, the fiscal deficit has risen to nearly seven percent of GDP in fiscal year 2023/24.
The reconstruction budget, which represents approximately 0.6 percent of the nation’s GDP, is aimed at revitalizing essential sectors such as housing, agriculture, and public infrastructure.
How the Funds Will Be Spent
According to the Ministry of Finance, the $451 million has been allocated as follows:
Infrastructure Rehabilitation: A substantial share will rebuild roads, bridges, and public utilities damaged by the floods, ensuring improved resilience to future disasters.
Support for Agriculture: Farmers will benefit from the restoration of farmlands and irrigation systems to stabilize food production.
Disaster Preparedness Investments: Funds will enhance early warning systems, disaster response mechanisms, and climate-resilient infrastructure.
The reconstruction plan is being executed within the framework of Rwanda’s partnership with the IMF under the Policy Coordination Instrument (PCI) and the Resilience and Sustainability Facility (RSF).
These arrangements have provided the country with much-needed fiscal space, including the immediate disbursement of $94.23 million under the RSF and $87.51 million through the Stand-By Credit Facility (SCF).
This reconstruction push is expected to stimulate key sectors of the economy, particularly construction and agriculture.
Analysts anticipate a surge in demand for construction materials, machinery, and labor, which could drive job creation and support GDP growth in the near term.
While Rwanda’s GDP growth remains robust at over eight percent in 2024, the fiscal deficit, public debt, and a widening current account deficit, all present medium-term risks, according to the IMF assessment.
