Rwanda set for new $262 million IMF stand-by facility

KIGALI (Reuters) -The International Monetary Fund said on Tuesday that a mission to Rwanda had agreed a new 14-month Stand-by Credit Facility worth $262 million to help the East African country deal with balance of payment pressures from climate shocks.

IMF staff and Rwanda also reached agreement on policies needed to complete the second reviews of an existing Policy Coordination Instrument and a programme under the Resilience and Sustainability Facility.

IMF board consideration of the agreements is tentatively scheduled for December, the fund said in a statement.

“Repeated droughts, the severe floods in May 2023, and tightening global financing conditions are compounding the challenges from the legacy of the (COVID) pandemic,” the IMF said, adding that the new facility would help Rwanda undertake flood-related reconstruction efforts.

In June, the IMF said Rwanda and international development banks planned to raise an additional 300 million euros ($319.62 million) to help the country adapt to climate change.

At a joint IMF-government news conference in Kigali, Rwandan central bank Governor John Rwangombwa said the National Bank of Rwanda was using every tool at its disposal to bring down inflation.

“We are committed to … bring back inflation to our band around the 5% benchmark that we follow. So we have agreed on that. We have also agreed to maintain a flexible exchange market as it is today,” he said.

In August, the central bank raised its benchmark rate by 50 basis points to 7.5% in an effort to maintain a downward inflation trend. Annual inflation had fallen as low as 11.9% in July, but it picked up to 12.3% in August and again to 13.9% in September.

($1 = 0.9386 euros)

(Reporting by Philbert Girinema in Kigali and Anait Miridzhanian in Johannesburg; Writing by Nellie Peyton and George Obulutsa; Editing by Alexander Winning, Tomasz Janowski and Mark Heinrich)