Rwanda: Seventh Review Under the Policy Support Instrument, Request for a Three-Year Policy Support Instrument and Cancellation of Current Policy Support Instrument

CONTEXTRwanda has enjoyed strong economic performance over the last decade, supported bysignificant external aid and close engagement with the Fund, including under a PSIsince 2010. The authorities have requested a new three-year PSI in support of theirnew poverty reduction strategy (EDPRS 2).KEY CHALLENGESRwanda faces two main economic challenges: In the near term, to maintain macroeconomic stability under uncertain prospects fordonor aid and the global environment. Over the medium term, to sustain strong and inclusive growth and povertyreduction while gradually reducing reliance on aid.MAIN POLICY RECOMMENDATIONS Continue to focus on inclusive growth and policies, while aligning spendingpriorities with available financing. Strengthen domestic resource mobilization by broadening the tax base, introducingcomprehensive tax regimes for agriculture and mining, and strengthening propertytaxation, and further enhancing revenue administration. Further improve public financial management through strengthened informationmanagement systems and capacity building. Modernize the monetary policy framework by injecting greater flexibility andimproving institutional arrangements. Ensure exchange rate flexibility to preserve reserve buffers and enhancecompetitiveness. Further develop financial markets and expand access to financial services.