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IFM downgrades Rwanda's 2016 growth prospects to 6 pct

Xinhua, November 5, 2015 Adjust font size:

The International Monetary Fund (IMF) has downgraded Rwanda's 2016 economic growth prospects owing to external risks in the global economy.

Laure Redifer, a senior IMF official Wednesday spoke at a joint press conference with Rwanda government officials in Kigali.

Redifer pointed out that lower global commodity prices and weaker growth prospects in the country's main export markets already felt by the mining sector would affect the performance of Rwanda's exports in the near term substantially.

"This will put pressure on the balance of payments and the IMF expects economic growth in 2016 to moderate to between 6 and 6.5 percent, lower than 7 percent previously projected," Redifer told journalists.

The IMF called on the government to adopt mechanisms to tighten economic policies in response to the external risks by ensuring exchange rate flexibility among other things.

A joint government and IMF statement meanwhile, said Rwanda's economic performance in 2015 would be stronger than previously anticipated.

Growth in the first half of the year averaged 7.3 percent with construction and services performing strongly while agriculture and manufacturing also grew in line with the projections, according to Rwanda's Finance minister Claver Gatete.

Projected GDP growth for 2015 has been revised upward from 6.5 to 7.0 percent, Gatete said.

Consumer price inflation is also expected to remain lower than 5 percent for the remaining period of the year despite the higher food and utility prices recorded in the month of September.

Redifer said the IMF was impressed with government's policies as of end of June this year they were consistent with their expectations.

She cited structural reforms especially on tax policy and administration among the areas where significant progress was made.

Redifer and her delegation of senior IMF officials has been in the country since end of October, meeting with various Rwanda government officials for the fourth review of the country's economic and financial program.

The delegation was briefed on the government's structural reforms aimed at strengthening the efficiency of Rwanda's public spending investment, tax compliance and broadening of the country's tax base. Endit