IMF sees Rwanda economy growing 8 pct, inflation steady

Rwanda's strong economic growth is expected to continue in a range of between 7.5 to 8 percent in the next two years, the International Monetary Fund (IMF) said.

The country's inflation was steady at close to 8 percent, the lowest in the region, helped in part by the reduction in fuel taxes and good harvest, the IMF said in a statement issued late on Wednesday after a two week visit to Kigali.

"Performance under the IMF-supported program continues to be strong," IMF Deputy Division Chief Catherine McAuliffe said.

"All end-December 2011 quantitative targets under the programme were met. Structural reforms are advancing, with notable progress in public financial management and analysis of revenue potential."

Rwanda's 2011 gross domestic product stood at 8.6 percent compared to 7.2 percent a year earlier, spurred by a strong growth in the key agriculture sector, as well as industry and services, the central African country said this month.

The growth was based largely on the industry sector which grew by 18 percent in 2011 and mineral products which were up by 50 percent, compared with a decrease of 11 percent in 2010, figures released by the statistics office in March showed.

Rwanda has had a better run on inflation than other countries in east Africa, including Kenya, Uganda and Tanzania where double digit inflation and weak currencies prompted authorities to increase interest rates to around 20 percent in some cases.

Rwanda's strong export performance resulted in a larger than expected balance of payments surplus in 2011, together with a large increase in official and private sector inflows, the IMF said.

The landlocked country's 2011/2012 budget is expect to remain on track on higher than expected budget support.

The IMF however warned of the risks of a revenue shortfall.

"In the event of a revenue shortfall, the government stands ready to delay non-priority spending to preserve the fiscal consolidation gains of recent years. In the face of rising fuel prices, the authorities will rely primarily on monetary policy to contain inflation," said McAuliffe.