Headwinds from the war in Ukraine, tightening of global financial conditions, consecutive weak agricultural seasons, and structural decline of external concessional financing have also put pressure on Rwanda’s economy for the past three years.
The economy registered strong post-pandemic growth but compounding shocks in recent years resulted in internal and external imbalances, while the development needs remain large.
Rwanda’s National Institute of Statistics data indicates that the service sector has contributed to the GDP by 46 percent and agriculture by 25 percent. The data shows that Rwanda’s GDP depends more on the service industry, including hospitality and communication, than agriculture, which was the biggest GDP contributor two years ago.
According to the IMF, carefully calibrated fiscal consolidation, proactive and data-driven monetary policy, continued exchange rate flexibility, and sustained progress on development and climate-related reforms are rebuilding buffers, curbing inflation, improving debt sustainability, and enhancing socio-economic resilience.
NISR data shows that by the end of the year, the prices of some basic foods have started to decrease. The average price increase in November 2023 was 9.19 percent while in the same month in 2022, it was 23 percent. The Central Bank of Rwanda says that there is hope that in 2024 the rate of price growth may reach 6 percent.
According to the bank, this rate should not normally exceed 8 percent when prices rise or go below 2 percent when prices fall.
This increase in prices was accompanied by franc inflation, which in November had reached 16 percent. Among the measures taken are the provision of subsidies for fertilizers and fuel products and the raising of the Central Bank’s lending rate to 7.5 percent by the end of 2023.
Price fall was more pronounced when it came to petroleum products. The government announced that gasoline went from 1,822 Rwf per liter to 1,639 Rwf, which means a decrease of 183 Rwf, and diesel from 1,662 Rwf to 1,635 Rwf reduced by 27 Rwf per liter.
The budget for 2023/24 reached 5,000 billion Rwf, with an additional amount of 265 billion Rwf.
The budget increased by 6 percent compared to 4,764.8 billion Rwf in the revised budget for the year 2022/23.
The Minister of Finance, Dr Uzziel Ndagijimana stated that the money coming from within the country is about 2,956.1 billion Rwf, equal to 59 percent of the total budget for the year 2023/24. In general, the income from the country plus the foreign loans that the country will pay has an addition of up to 76 percent in the budget for the year 2023/2024.