Rwanda would see economic growth of 7.5 percent this year and more than 8 percent next year, helped by strong exports and the restoration of aid, the finance minister said yesterday.
The 7.5 percent growth target for this year remained achievable, Claver Gatete said on the sidelines of an emerging markets conference, even though the International Monetary Fund cut its growth forecast last week for the east African country to 6.6 percent.
“We believe that, with some structural changes that we are putting in place, that the 7.5 percent is still achievable,” Gatete said. “For the following year we will return to the normal pace of growth, which is above 8 percent.”
Rwanda’s economic growth rate averaged 8.2 percent between 2006 and 2012.
Exports increased by 46 percent in the first half, driven by strong growth in minerals, coffee and tea shipments, he said.
Planned reforms included improvements in financial services and capital markets, and in export sectors such as agriculture, Gatete said.
Further reforms, including developing public-private infrastructure partnerships, would enable Rwanda to reach its targeted annual growth of 11.5 percent by 2020, he added.
Bilateral and multilateral lenders had fully restored their aid to Rwanda after cutting it last year, Gatete said. Almost 40 percent of the 2013/14 budget was expected to be provided by international aid, he noted.
International donors suspended aid over allegations by UN experts and the Congolese government of Rwandan backing for rebels in the neighbouring Democratic Republic of Congo. Kigali denies supporting the rebels.
Rwanda launched a $400 million (R4 billion) international bond in April at the height of demand for high-yielding bonds. The bond saw subscriptions of more than 8 times the issue size, but has since fallen sharply in value.
This was not related to problems in Rwanda’s economy, Gatete said, but to concern about the US Federal Reserve’s anticipated withdrawal of monetary stimulus.
“Quantitative easing and the measures taken by the US, that is what is really driving investors,” he said.
Rwanda had no immediate plans to launch more international debt, but would do so when it needed to finance specific projects, Gatete said.
The country was developing its capital markets, Gatete added, with plans to extend its domestic yield curve.
The World Bank’s private sector arm, the International Finance Corporation, planned to launch a 10-year bond denominated in Rwandan francs, Gatete noted. – Carolyn Cohn in London for Reuters