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Rwanda’s central bank raises lending rate. Here’s why

Published

1 year ago

August 17, 2023

In an effort to continue a decreasing trend in the country’s inflation rate, Rwanda’s central bank raised its primary lending rate by another 50 basis points on Thursday to 7.5%.

The apex bank hinted that the move would be its final tightening cycle as the governor, John Rwangombwa stated that the bank was continuing to exercise caution due to geopolitical tensions and the possibility of unforeseen climate occurrences that could have an impact on agricultural productivity.

Yearly inflation is still above the National Bank of Rwanda’s recommended 2%-8% goal range despite having peaked at 21.7% in November of last year and decreasing to 11.9% in July.

“If nothing else happens, or unexpectedly happens, from our projections we don’t expect any further increase (in our policy rate) going forward,” Rwangombwa told a news conference.

“This decline is expected for all main components: core, energy and fresh food inflation. We don’t see this rate increasing further, and we remain optimistic that inflation further reduces to our benchmark by next year…”, Rwangombwa said while explaining the policy.

By year’s end, Rwangombwa predicted that the inflation rate would be below 8% and about 5% the next year.

Living conditions in the landlocked nation of East Africa significantly improved thanks to the country’s robust economic growth, which averaged 7.2% per year over the ten years leading up to 2019. The economy also recovered effectively from the decline brought on by the coronavirus pandemic.

According to the analysis of the Monetary Policy Committee (MPC) in May, inflationary pressures are reducing despite still being strong due to ongoing global economic issues and a decrease in domestic agricultural production.

Although higher food costs and robust domestic demand have contributed to continuously high inflation, the International Monetary Fund stated in June that strong output in manufacturing and services has more than compensated for decreased agricultural production and construction.

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IMF mission concludes 4th loan program assessment in Egypt

Published

2 days ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

3 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.