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Country Report

Rwanda

August 2006

The Economist Intelligence Unit 26 Red Lion Square London WC1R 4HQ United Kingdom

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Rwanda 1

Country Report August 2006 www.eiu.com © The Economist Intelligence Unit Limited 2006

Contents

Rwanda

3 Summary

4 Political structure

5 Economic structure 5 Annual indicators 6 Quarterly indicators

7 Outlook for 2006-07 7 Political outlook 8 Economic policy outlook 10 Economic forecast�

12 The political scene

17 Economic policy

19 The domestic economy 19 Economic trends 20 Agriculture 21 Infrastructure

22 Foreign trade and payments

List of tables 9 International assumptions summary 10 Forecast summary 19 Operations of central government 22 Rwanda: external debt 22 Ratios (%)

List of figures

5 Exchange rate 5 Foreign reserves 11 Gross domestic product 11 Consumer price inflation

Rwanda 3


Rwanda August 2006

Summary

There will be little opportunity for non-violent opposition to the governing Rwandan Patriotic Front (RPF) within the country during the forecast period. Rwanda's relations with its neighbours are likely to remain tense, as political changes are under way in the Democratic Republic of Congo (DRC). Rwanda's relations with donors will be subject to setbacks as the RPF and its proxy forces remain active in the DRC. Assuming normal weather conditions, real GDP growth is forecast to be robust, at 5.8% in 2006 and 6% in 2007, owing mainly to improvements in agriculture, services and mining. Declining food prices will allow average inflation to fall from 9.2% in 2005 to 6% in 2007. Restructuring of the tea and coffee sectors will boost exports over the forecast period. However, because of declining coffee prices and high oil prices, the trade deficit will increase and the current-account deficit will reach 7.5% of GDP in 2006 and 8.5% of GDP in 2007.

The African Union (AU) has repeated its call for greater political inclusiveness in Rwanda. The gacaca (traditional justice) trials over the country's genocide in 1994 are expected to try 760,000 suspects by the end of 2007. Reports have emerged that Rwanda is expected to respect the Congolese elections, and not encourage its proxy forces to interfere. Burundi and Tanzania have expelled many more Rwandan refugees who have no clear grounds for asylum.

Preparations for a new poverty reduction strategy have begun throughout the government, with closer links promised to budget formulation. The IMF has concluded its latest Poverty Reduction and Growth Facility (PRGF) with a generally positive review. A new PRGF was subsequently agreed.

The IMF has expressed its concerns regarding a surge in private-sector credit from commercial banks in the second half of 2005. Inflation has crept up, largely because of increased fuel costs. There was a strong improvement in government finances in 2005, owing to strong tax revenues, with a small fiscal surplus recorded. Increased rainfall has improved the prospects for the 2006 harvest. A second mobile telephone provider has entered the Rwandan market.

Coffee exports rose strongly in the first half of 2006. Fears have grown that the large debt forgiveness granted to Rwanda by multilateral institution such as the IMF and World Bank could be offset by a reduction in aid.

Editors: Philip Walker (editor); Pratibha Thaker (consulting editor) Editorial closing date: July 24th 2006 All queries: Tel: (44.20) 7576 8000 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule

The political scene

Economic policy

The domestic economy

Foreign trade and payments

Outlook for 2006-07

4 Rwanda


Political structure

République rwandaise

Unitary republic

Based on Belgian law and a new constitution introduced in June 2003

National Assembly, with 80 members; 53 directly elected and 27 indirectly elected by representatives of special interest groups; Senate, with 24 members, 16 indirectly elected and 8 appointed by the president

August 2003 (presidential), September-October 2003 (legislative); next elections due in 2010

The president, elected by universal suffrage to a seven-year term in August 2003, renewable once only

Appointed by the president in October 2003. Last reshuffle March 2006.

Rwandan Patriotic Front (RPF), Parti démocrate centriste (PDC), Parti libéral (PL), Parti social démocrate (PSD); the externally based opponents of the government include Forces de résistance pour la démocratie (FRD), Rassemblement pour le retour des réfugiés et la démocratie au Rwanda (RDR) and rebels based in the Democratic Republic of Congo, Armée pour la libération du Rwanda (Alir) and Forces démocratiques de libération du Rwanda (FDLR), which include the former Interahamwe and members of the former Rwandan army (Forces armées rwandaises�FAR)

President Paul Kagame (RPF) Prime minister Bernard Makuza (ex-Mouvement démocratique républicaine)

Agriculture, livestock & forestry Anastase Murekezi (RPF) Commerce, industry, investment & tourism Protais Mitali (RPF) Defence Marcel Gatsinzi (independent) Education Jeanne d'Arc Mujawamariya (RPF) Energy & communications Albert Butare (independent) Environment, forestry & natural resources Christophe Bazivamo (independent) Finance & economic planning James Musoni (RPF) Foreign affairs & regional co-operation Charles Murigande (RPF) Gender & the promotion of women Valerie Nyirahabineza (independent) Health Damascene Ntawukuriryayo (independent) Internal security Sheikh Fazil Musa Harerimana (independent) Justice Edda Mukabagwiza (RPF) Local government Protais Musoni (RPF) President's office Solina Nyirahabimana (RPF) Prime minister's office in charge of information Laurent Nkusi (PL) Public service & labour Manasseh Nshuti (independent) Youth, culture & sports Joseph Habineza (independent)

François Kanimba

Official name

Form of state

Legal system

National legislature

National elections

Head of state

National government

Main political parties and political forces

Central bank governor

Key ministers

Rwanda 5


Economic structure

Annual indicators

2001a 2002a 2003 a 2004 a 2005b

GDP at market prices (Rwfr bn) 754.3 825.0 905.3 1,060.2 1,230.5

GDP (US$ bn) 1.7 1.7 1.7 1.8 2.2

Real GDP growth (%) 6.7 9.4 1.0 4.0 5.2

Consumer price inflation (av; %) 3.3 2.0 7.5 11.9 9.2a

Population (m) 8.4 8.6 8.8 8.9 9.1

Exports of goods fob (US$ m) 93.3 67.2 59.2 97.9 118.2

Imports of goods fob (US$ m) 245.2 233.3 217.8 257.9 360.0

Current-account balance (US$ m) -102.5 -126.2 -84.8 -6.2 -67.5

Foreign-exchange reserves excl gold (US$ m) 212.1 243.7 214.7 314.6 405.8a

Exchange rate (av) Rwfr:US$ 442.8 476.3 537.7 574.6 555.9a

a Actual. b Economist Intelligence Unit estimates.

Origins of gross domestic product 2004 % of total Components of gross domestic product 2004 % of totalAgriculture 40.5 Private consumption 83.7Industry 21.5 Public consumption 13.3Services 38.1 Gross fixed investment 20.8

Exports of goods & services 9.6 Imports of goods & services -27.4

Principal exports fob 2004 US$ m Principal imports cif 2003 US$ mCoffee 27.5 Consumption goods 134.2

Tea 25.6 Intermediate goods 43.8Cassiterite & tin 12.9 Capital goods 40.7

Coltan 10.6 Energy 40.5

Main destinations of exports 2005a % of total Main origins of imports 2005a % of totalIndonesia 63.9 Kenya 24.6

Germany 3.6 Uganda 6.4China 2.3 Germany 5.6

Malaysia 1.7 Belgium 5.4Belgium 1.6 Israel 3.5

a Based on partners' trade returns; subject to a wide margin of error.

6 Rwanda


Quarterly indicators

2004 2005 2006 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 QtrPrices Consumer prices (2000=100) 123.9 128.5 132.2 135.8 138.5 139.2 138.3 144.5Consumer prices (% change, year on year) 11.1 12.6 13.3 12.2 11.8 8.7 4.6 6.4Financial indicators Exchange rate Rwfr:US$ (av) 575.9 573.9 574.6 561.3 556.1 552.3 554.1 553.4Exchange rate Rwfr:US$ (end-period) 579.9 573.5 565.6 560.0 558.7 555.1 553.7 552.4Discount rate (av; %) 14.50 14.50 14.50 13.50 13.50 12.50 12.50 12.50M1 (end-period;Rwfr m) 90,647 96,124 99,941 112,218 119,930 118,207 129,326 130,607M1 (% change, year on year) 9.7 17.3 21.4 26.4 32.3 23.0 29.4 16.4M2 (end-period;Rwfr m) 186,877 194,365 214,562 224,106 235,680 233,889 253,077 257,685M2 (% change, year on year) 23.5 22.0 30.0 23.2 26.1 20.3 18.0 15.0

Foreign trade (Rwfr m) Exports fob 17,492 17,119 12,606 10,277 22,268 19,584 16,486 10,773Imports cif -37,816 -41,423 -51,765 -49,816 -62,028 -56,896 -50,589 -44,202Trade balance -20,324 -24,304 -39,159 -39,539 -39,760 -37,312 -34,103 -33,429Foreign reserves (US$ m) Reserves excl gold (end-period) 218.6 245.1 314.6 325.9 332.0 334.5 405.8 419.1

Source: IMF, International Financial Statistics.

550

555

560

565

570

575

580

585Q2

2004Q3 Q4 Q1

05Q2 Q3 Q4 Q1

06

Av

End-period

Exchange rate(Rwfr:US$; scale inverted)


0

50

100

150

200

250

300

350

400

450

Q22004

Q3 Q4 Q105

Q2 Q3 Q4 Q106

Foreign reserves (a)(US$ m)

(a) Excluding gold.


Rwanda 7


Outlook for 2006-07

Political outlook

Rwanda's democratic process remains heavily constrained, and real power rests in the hands of the president, Paul Kagame, and his party, the Rwandan Patriotic Front (RPF). Independent parties are, and seem set to remain, essentially proxies of the RPF, almost always voting with the government. There is little prospect for either individual politicians or members of the public to oppose the government as a whole, as people fear arrest under restrictive laws banning "divisionism". Those who do speak out, particularly on the charged issue of ethnicity and the apparent political under-representation of Hutus, will risk detention or "disappearance" for doing so. External opponents of the government are dispersed and politically weak. Although they may eventually pose a serious challenge to the ruling party, this will not be the case during the forecast period.

The gacaca (quasi-traditional justice) trials of genocide suspects will have a major impact on public life during the forecast period, increasing tensions at the local level and in government. Tutsi genocide survivors are scared that they may be killed to stop them testifying. Meanwhile, many Hutus who have avoided being accused of genocide thus far�including prominent members of the current administration�fear that someone will denounce them, and they could face imprisonment if the charges stick. The government has a difficult balance to strike in trying to demonstrate to Hutus that their ethnicity is not on trial without earning the bitter accusation from angry genocide survivors that they have been betrayed once more. The UN's International Criminal Tribunal for Rwanda (ICTR), which is prosecuting the prime architects of the genocide, is aiming to complete its caseload by the time its mandate expires in 2008. Although it is re-examining some cases, the Economist Intelligence Unit is increasingly convinced it will not prosecute senior commanders of the RPF for war crimes. This has already resulted in accusations from those on trial at the ICTR that the tribunal is imposing victors' justice, with which an increasing number of observers will concur, weakening the tribunal's otherwise significant contribution to international jurisprudence.

The Rwandan government's international standing and its support from Western countries have waned because of concerns about political liberty at home and the government's controversial involvement in the east of the Democratic Republic of Congo (DRC). However, with the exception of France, most donor heavyweights�the US, the EU, the UK, Belgium and Sweden�broadly back the government. They acknowledge that the 1994 genocide makes the country a special case, and also appreciate the government's relatively good record on poverty reduction and economic governance reforms. This support is expected to continue over the forecast period, although it is liable to delay in response to IMF concerns about economic management and if further reports concerning the government's involvement in the DRC surface.

Domestic politics

International relations

8 Rwanda


Hopes were raised by an announcement in early 2005 by the Forces démocratiques pour la libération du Rwanda (FDLR), a DRC-based militia that opposes the Rwandan government, that it would disarm and repatriate voluntarily. However, the FDLR wants to be allowed to establish itself as a political party and to establish its fighters' exemption from the gacaca, to which the Rwandan government will not agree. We do not, therefore, anticipate that the FDLR will disarm and repatriate voluntarily during the forecast period. The UN Mission in the DRC (MONUC) and the Congolese armed forces are conducting military operations against the FDLR in eastern DRC to force it to disarm, but the terrain is challenging and we are increasingly inclined to believe that the militia have achieved a de facto stalemate.

The Rwandan government is heartened by the Congolese armed forces' efforts against the FDLR, and sustained international intervention appears to have succeeded in improving relations between the Rwandan government and the president of the DRC, Joseph Kabila. Like its counterparts in Uganda and the DRC, however, the Rwandan government is believed to be supporting proxy forces in the DRC's Ituri region, and periodic clashes between these forces will further strain relations. Militia previously backed by Rwanda are trying to derail the DRC's national elections, expected on July 30th, do not appear to have received much support from the Rwandan government.

Owing to a deep-rooted personal mistrust between Mr Kagame and the Ugandan president, Yoweri Museveni, relations with Uganda will remain difficult. Both believe the other to be aiding their opponents, and both have adopted an assertively military posture in the region. Relations with the Burundian government appear warmer than at any point since independence. Mr Kagame is Tutsi and his Burundian counterpart, Pierre Nkurunziza, Hutu. However, both are military men in outlook, with apparently similar technocratic leanings and a shared interest in fighting rebel Rwandan and Burundian Hutu militia.

Economic policy outlook

The former minister of finance and economic planning, Donald Kaberuka, was one of the longest-serving ministers in the cabinet, shaping economic policy and Rwanda's relations with its key donors for the best part of a decade. His successor, James Musoni, shares Mr Kaberuka's neo-liberal, non-interventionist approach to economic policy, and is likely to enjoy relatively good relations with the country's main donors. Like Mr Kaberuka, we expect Mr Musoni to push for as much government spending as donors will stand for, but the IMF always reined in Mr Kaberuka's attempts to maximise spending, and thus the fiscal deficit, and will do the same with Mr Musoni under the newly agreed second poverty reduction and growth facility (PRGF).

The government is committed to producing a second poverty reduction strategy (PRS), to replace the one that expired at the end of 2005, by mid-2007, and has embarked on the process of doing so. The stated aim of the new PRS is likely to be the same as the previous one�to boost pro-poor spending and achieve rapid but sustainable labour-intensive and poverty-reducing growth, but with more

Policy trends

Rwanda 9


emphasis on the latter. We expect targets to include annual real GDP growth of at least 5%, but preferably around 6%; macroeconomic and price stability; continued political decentralisation; higher rural incomes; and improvements in public services. All of this is possible, but the government will have to carefully balance its attempts to streamline local government whilst ensuring that there is the capacity to implement the policy reforms. The government believes that land reform is the key to boosting rural incomes. Implementation of a newly passed Land Act, which seeks to encourage land consolidation and establish a dominant role for the state in determining land use, will begin in the forecast period. New local land commissions are being set up, but most are expected to start functioning in 2007.

Like its predecessors, the spending plans of the 2006 budget (January-December) are reliant on the goodwill of donors, since external grants are budgeted to contribute more than 50% of government revenue for the year. Although we anticipate further growth in domestic revenue collection over the forecast period because of economic growth and continued performance improvements by the Rwanda Revenue Authority, the rate of increase is unlikely to match the impressive gains made in recent years. Meanwhile, expenditure will rise as the government attempts to make good on its poverty reduction policies. Whilst the Rwandan government is expected to remain on good terms with its donors, their assistance is expected to stagnate over the forecast period as concerns increase over encouraging donor dependency. Overall, we forecast a fiscal deficit, including grants, of 1.1% of GDP in 2006, rising to 2.2% of GDP in 2007. Excluding grants, the deficits would be in the region of 13-14% of GDP, highlighting the importance of Rwanda's donors. The government says that it intends to reduce its financing of deficits through domestic debt instruments such as Treasury bills in order to tackle the growing problem of the private sector becoming crowded out, implying it will increase its drawing down on foreign-exchange reserves.

The government is committed to an active monetary policy to try to keep the rate of inflation down, but its efforts may again be hampered, as in 2005, by poor agricultural performance making food expensive (although better rains in mid-2006 may mitigate this), and high oil prices, which will have a generalised inflationary impact. The anticipated fiscal deficits during 2006-07 will encourage the Banque nationale du Rwanda (the central bank) to keep a lid on interest rates to contain the cost of domestic borrowing for the government. Another factor affecting interest rates is continued donor inflows, which constrain T-bill yields, in turn affecting the rest of the interest-rate environment.

Fiscal policy

Monetary policy

10 Rwanda


Economic forecast

Global growth is expected to remain robust over the forecast period, with many commodity prices expected to remain at or close to their current record highs. Stagnation in many of the traditional coffee drinking markets of North America and Western Europe will restrict demand growth, although demand for high quality speciality coffees, including Rwanda's finest fully washed arabica, will remain more buoyant. On the supply side, our forecasts of production by some key producers, particularly Brazil, have been lowered, although world production is expected to trend upwards as the high prices of the last year attract growers. Overall, average prices for arabica, Rwanda's main coffee export, are expected to begin to fall in 2006, and into 2007. International prices for tea are forecast to remain steady. Oil prices are expected to remain high, as supply remains tight, although they should ease slightly in 2007.

The government has targeted 6% real GDP growth over 2006-07, which is achievable provided that rainfall is conducive to further agricultural production increases (agriculture accounts for around 40% of Rwanda's GDP). Following a dry start to 2006, rainfall has improved, and we forecast growth for the year of 5.8%, before reaching 6% in 2007. We expect continued strong performance in services and mining and, to a lesser extent, construction. However, manu-facturing will continue to be weak because of regional competition, high electricity prices and uncertain supply. Electricity generation from methane gas in Lake Kivu is expected to have a significant positive impact on the national electricity supply, but only from 2008.

Inflation has crept up so far in 2006, with a poor first harvest pushing up food prices and continued high oil prices. Improved agricultural output in the rest of 2006 following better rains in April and May will help to contain inflation, although continued high government spending will impose some upward

International assumptions summary (% unless otherwise indicated)

2004 2005 2006 2007

Real GDP growth World 5.6 5.0 5.2 4.8

OECD 3.2 2.7 3.0 2.3

EU25 2.4 1.7 2.4 2.1

Exchange rates ¥:US$ 108.1 110.1 114.3 100.3

US$:� 1.244 1.245 1.258 1.385

SDR:US$ 0.675 0.677 0.678 0.637

Financial indicators ¥ 2-month private bill rate 0.00 0.00 0.20 0.58

US$ 3-month commercial paper rate 1.48 3.49 5.46 5.53

Commodity prices Oil (Brent; US$/b) 38.5 54.7 69.7 66.0

Coffee, Arabica (US cents/lb) 80.5 114.9 113.8 110.5

Food, feedstuffs & beverages (% change in US$ terms) 8.5 -0.5 8.9 -4.5

Industrial raw materials (% change in US$ terms) 21.0 10.3 41.4 -3.4

Note. Regional GDP growth rates weighted using purchasing power parity exchange rates.

Economic growth

Inflation

International assumptions

Rwanda 11


pressure on the rate. However, we expect monetary policy to be more effective in containing inflation growth than in 2005, and forecast annual average inflation to be around 6.7% in 2006, falling to 6% in 2007.

The Rwandan franc has held its ground against the US dollar so far in 2006, supported by strong exports, donor support and the weak US currency. We forecast that the Rwandan franc will depreciate moderately against the US dollar and euro during the forecast period in both nominal and real terms. This is because of the weakening outlook for exports and the need to maintain external competitiveness. We expect the Rwandan franc to average at around 560:US$1 in 2006, falling to 585:US$1 in 2007.

Structural reforms in the tea and coffee sectors, including privatisation, will lead to increased investment, stimulating improvements in production and quality over the forecast period. However, with coffee prices expected to start to decline over the forecast period, we anticipate only a slight increase in recorded exports, to US$130m in 2006 and US$134m in 2007. As usual, exports to neighbouring states worth tens of millions of US dollars will go unrecorded. The trade deficit is forecast to increase because of higher imports of fuel and construction materials. Relatively strong economic growth, coupled with Rwanda's landlocked position, will help to push the services deficit up. The cost of servicing Rwanda's external debt will fall off during 2006 and into 2007 because of multilateral debt relief. Current transfers will record a large surplus owing to substantial financial inflows from donors. However, donor inflows are expected to decline over the forecast period, as the World Bank and the IMF�the country's biggest lenders�reduce transfers following their granting of debt relief. Overall, the current-account deficit is expected to widen over the forecast period, to 7.5% of GDP in 2006 and 8.5% of GDP in 2007.

Forecast summary (% unless otherwise indicated)

2004 a 2005 b 2006c 2007c

Real GDP growth 4.0 5.2 5.8 6.0

Consumer price inflation (av) 11.9 9.2 a 6.7 6.0

Deposit rate 9.5 b 7.9 a 8.0 7.0

Government balance (% of GDP) -0.2 0.7 -1.1 -2.2

Exports of goods fob (US$ m) 97.9 118.2 130.0 134.1

Imports of goods fob (US$ m) -257.9 -360.0 -466.0 -476.5

Current-account balance (US$ m) -6.1 -67.5 -184.1 -222.9

Current-account balance (% of GDP) -0.3 -3.0 -7.5 -8.5

Exchange rate Rwfr:US$ (av) 574.62 555.94 a 560.00 585.00

Exchange rate Rwfr:¥100 (av) 531.44 505.05 a 489.83 583.54

Exchange rate Rwfr:� (av) 714.69 692.00 a 704.31 810.22

Exchange rate Rwfr:SDR (av) 851.11 821.53 a 826.41 918.55

a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts.

Exchange rate

External sector

12 Rwanda


Rwanda Sub-Saharan Africa

Gross domestic product(% change, year on year)

Rwanda Sub-Saharan Africa

Consumer price inflation(av; %)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

20

01

02

03

04

05

06

07

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

20

01

02

03

04

05

06

07

The political scene

The fifth African Union's African Peer Review Mechanism (APRM) forum, which concluded in Banjul, the Gambia on June 30th, featured discussion of the Rwandan government's efforts to implement the recommendations of the APRM's 2005 report on the country, which had urged it to pursue a "policy of inclusiveness" to win its citizens' trust (August 2005, The political scene). A discussion document presented to the forum commended the government for its progress in advancing social and economic rights, principally through widening access to education and health care and improving women's representation in politics, but also claimed political parties were still "unable to operate freely", and expressed concern at the judicial standards being observed in the gacaca (neo-traditional justice) trials for genocide suspects. In a diplomatic reference to the widely held view that Tutsis unfairly dominate Rwanda's political and public life, the APRM document has also called on the government to "dilute the perception of potential ethnic hegemony by one group over others". Responding, President Paul Kagame defended gacaca as the only practical way to process the enormous genocide judicial case-load, and denied that Rwandan political parties were unable to operate freely or that there was any ethnic bias in the distribution of power in the country.

Shortly prior to the APRM forum, Mr Kagame was equally dismissive of suggestions that Rwandan political parties based outside the country might have any legitimate grievances. Answering questions from the press in the presidential village in Kigali, Mr Kagame claimed to be open to constructive dialogue with opposition parties in exile, but at the same time dismissed them as not serious and having no cause to represent. Shortly afterwards, on June 17th, a new political party called the Party for Democracy in Rwanda (PDR Ihumure) was formed in Washington DC, in the US. Among the party's founder members was Paul Rusesabagina, a Hutu former Kigali hotel manager whose efforts to save people during the 1994 genocide were dramatised in the film, Hotel Rwanda, but who now complains that Tutsis have taken over political life in his country. The Rwandan political parties forum, which includes all

APRM repeats call for political inclusiveness in Rwanda

Kagame dismisses externally- based opposition parties

Rwanda 13


recognised parties in the country, but is dominated by the ruling Rwandan Patriotic Front (RPF), immediately condemned PDR Ihumure's formation in the US rather than in Rwanda and accused the party of "divisionism".

Divisionism, meaning the promoting of ethnic division, is illegal in Rwanda, and the charge is frequently levelled by the government at any organisation that opposes it. One of the highest profile figures thus far convicted of the charge is former president, Pasteur Bizimungu. In February the Supreme Court upheld the earlier conviction of Mr Bizimungu for divisionism and treason, following an appeal from the former president for it to be set aside because of alleged irregularities in the original trial (May 2006, The political scene). Mr Bizimungu has since written to Mr Kagame appealing for both pardon and release but in an interview with American journalists during a visit to the United States for a meeting with president George W Bush, Mr Kagame made it clear he was unimpressed by the letter and was unlikely to act on it.

In May the US-based non-governmental organisation (NGO), the Fund for Peace, released its latest assessments of global state capacity according to 12 "failed state" criteria, which include assessments of "group grievances", uneven economic development, state legitimacy and "factionalised elites". The assessment's overall conclusion was that the Rwandan state had strengthened slightly over the past year in most areas but serious problems remained. Rwanda's total score in 2006 according to the assessment was 92.9 (where a score of 120 represents total state failure and 0 the opposite), an improvement of 3.6 points from the 2005 assessment. Rwanda's troubled neighbour the Democratic Republic of Congo (DRC) meanwhile scored 110.1 in 2006, which was the world's second-worst score.

Rwanda's 2006 assessment found an improvement in its economic indicators, and better ratings too for uneven development because of the government's decentralisation strategy. The assessment also reported an improved rating for human rights despite what it said were continued restrictions on freedom of speech, press and assembly, and an improved rating too for state legitimacy, albeit from a poor base, largely because of an ongoing anti-corruption drive. Nevertheless, the assessment concluded that public service delivery had worsened during 2006, apparently because of problems with the affordability of the government's community health insurance programme. At the same time, the assessment noted that demographic pressures were building dangerously, while "group grievances" were worsening significantly, which it said was owing to government moves to prevent free expression, particularly on the vexed issue of ethnic representation in politics.

André Bumaya, the president of the Parti Démocratique Islamique (PDI), who was sacked as minister of public service in a government reshuffle in March (May 2006, The political scene), was cleared of charges of serious irregularities in the retrenchment of civil servants during 2005 on June 30th. A parliamentary commission had been appointed to investigate the matter after retrenched civil servants complained last year that they had been unjustly treated and deserved compensation. Not so fortunate was Adrian Rangira, a member of parliament

Mr Kagame unlikely to pardon former president Bizimungu

A new study concludes that the state is strengthening

A former minister is cleared of irregularities

14 Rwanda


from the Union Démocratique du Peuple Rwandais (UDPR) who resigned his seat on June 27th following allegations by a parliamentary commission of inquiry that he was implicated in a failed project to build houses for genocide survivors. Mr Rangira has denied the allegations, but said he was stepping down to enable an independent investigation of the matter. Also in trouble is Ben Karenzi, the former Rwandan ambassador to South Africa and then secretary-general in the ministry of health, who together with his brother, Amos Kamugisha, were arrested and detained in Kigali in late June on charges of selling illegal pharmaceuticals. Both men have strongly denied the charges.

A report released in May by the New York-based human rights organisation, Human Rights Watch (HRW), entitled Swept Away, has alleged that the authorities in Kigali regularly remove homeless children from the capital's streets and dump them in an overcrowded, unofficial detention centre in the suburb of Gikondo. HRW's report said that there are hundreds of child detainees at the Gikondo centre, as well as sex workers and foreign nationals without visas, all being held under colonial-era vagrancy laws, and apparently suffering from a lack of adequate food, water and medical care, in violation of the UN Convention on the rights of children, to which Rwanda is a signatory. Apparently, Jeanne Gakuba, Kigali's vice-mayor for social affairs, admitted to HRW that the Gikondo centre has no legal status, which may be why it appears so short of funds to feed and care for its inmates. Inmates are seemingly only meant to stay in the centre for three days, but many are said to remain there for months on end, after which they are often thrown back onto the streets. The government reacted angrily to the HRW report, with internal security minister, Sheikh Musa Fazil Harerimana, calling it "baseless, unfounded and destructive". According to Mr Harerimana, and in contradiction of Ms Gakuba, the Gikondo centre was legally established by the Kigali City Council as a transit centre for the rehabilitation of homeless children and "idlers" before reuniting them with their families in the countryside.

A new English language weekly newspaper, Focus, is being sold in Kigali. Thus far it has taken a bold stance, including a piece applauding Mr Kagame, but ridiculing Rwandan democracy. Priced at Rwafr1000 (US$1.81), the paper is far too expensive for most Rwandans, even those who can read English, and circulation is destined to be small. Even so, Focus is certain to attract the attentions of the authorities before too long, and it remains to be seen whether its journalists will manage to continue their work or will rather opt to pursue their studies' abroad, as so many of their predecessors from Rwanda's independent press have done before them.

Gacaca trials, which were suspended during local government elections earlier this year and were expected to restart in May (May 2005, The political scene), resumed instead on July 15th. According to the justice ministry, gacaca trials are scheduled for completion by the end of 2007, with an expected 12,103 courts and 170,000 judges trying an estimated case-load of over 760,000 genocide suspects. The ministry of justice arrived at this massive number by extrapolating from the results of the pilot phase of the gacaca process, which saw around 63,000 people tried for genocide in about 750 courts. Gacaca trials

Human Rights Watch alleges abuses of children's rights

Focus hits Kigali news stands

Gacaca trials resume

Rwanda 15


have been criticised, not least by the APRM, for failing to meet international judicial standards, but have been strongly defended by the government as the only viable option available, given the complete inability of formal judicial structures to process the genocide case-load.

On July 7th the Senate confirmed the appointment of Martin Ngoga as the new prosecutor-general. Mr Ngoga, who also heads a committee monitoring the work of the International Criminal Tribunal for Rwanda (ICTR), replaced Jean de Dieu Mucyo, who was earlier this year named chairman of a new commission investigating France's role in the 1994 genocide. Mr Ngoga's standing with the Rwandan government is high because of his earlier role as the country's agent at the International Court of Justice (ICJ) in the Hague, where his rejection of its jurisdiction in a case brought by the DRC government regarding the alleged plunder of the DRC by Rwanda was subsequently upheld by the ICJ, much to the fury of the DRC government. A similar case brought by the DRC against the Ugandan government at the ICJ was successful, resulting in the awarding of millions of US dollars of damages to the DRC from an embarrassed Ugandan government by the court.

The Appeals Chamber of the ICTR made a key ruling on June 16th, stating that all trial chambers must take "judicial notice" that genocide took place in Rwanda between April 6th and July 17th 1994. The ruling means prosecution lawyers no longer have to prove in each case that there was a genocide and defence lawyers can no longer make the claim that it was not genocide but civil war in which their clients participated. Mr Ngoga applauded the ruling as an "historic landmark" but said it should have happened back in 1998, when the former prime minister, Jean Kambanda, confessed to the ICTR that he had participated in the planning of the genocide (Fourth quarter 1998, The political scene). ICTR detainees, by contrast, published an open letter denouncing the decision of the Appeals Chamber as a "denial of justice" which they said proved the ICTR was "controlled" by the Rwandan government. ICTR defence lawyers had earlier also criticised the Appeals Chamber ruling, with some alleging it had "muzzled" them and that its main purpose was not justice but rather merely to speed up trials.

The ICTR has completed 28 trials so far, with 27 still in progress, and has been set a deadline by the UN Security Council of the end of 2008 to complete them (with a further two years for appeals). The ICTR's chief prosecutor, Hassan Bubacar Jallow, told the UN Security Council in June he was broadly on track to finish on time, but wanted more member states both to prosecute his case-load in their courts and to detain ICTR convicts in their prisons. The Rwandan government wants to have at least some of those sentenced by the ICTR imprisoned domestically, but the ICTR will not transfer anyone until it is satisfied they will not face the death penalty. Initially it seemed the government would scrap the death penalty (May 2006, The political scene), but it has since indicated it will instead just waive it for transferees. It remains to be seen whether this will be acceptable to the ICTR.

Meanwhile, the ICTR appears unlikely to pursue any prosecutions for alleged RPF war crimes committed during 1994 despite recently reviewing some

ICTR prosecutors no longer have to prove genocide

16 Rwanda


potential cases, leading to allegations that it is perpetrating "victors' justice" (May 2006, The political scene). An open letter from HRW and the International Federation of Human Rights on June 2nd called for RPF prosecutions by the ICTR, or failing that, prosecutions by some other international body after the ICTR has completed its work, and stated that if these did not materialise the legacy of the tribunal would be at risk.

The much touted threat to the imminent DRC elections posed by Rwanda-backed dissident units within the Congolese armed forces has not materialised thus far, and little has been heard of Colonel Laurent Nkunda, who has been their main commander in the past. One well-placed source within the UN mission to the DRC (MONUC) attributes the relative calm to the UN Security Council's success in discreetly negotiating an agreement with Mr Kagame for Rwanda not to disrupt the poll. According to the source, the essence of the agreement was for the Rwandan government not to interfere with Congolese elections in return for UN Security Council guarantees of continued influence in the new Congolese administration, and the continued efforts of the Congolese armed forces to pursue the Forces démocratiques pour la libération du Rwanda (FDLR), an anti-Rwandan government militia based in eastern DRC. After years of alleging Congolese government backing for the FDLR, on May 9th Mr Kagame suddenly stated publicly that he believed it was no longer doing so, adding that his government's relations with its Congolese counterpart had improved "a lot".

At the same time, the DRC president, Joseph Kabila, has noticeably eased up on his anti-Rwandan government rhetoric, although other presidential hopefuls have been less shy, and have continued to denounce Rwandan influence in the east of the country. Mr Kagame's new rhetoric is plainly welcome news for the UN Security Council, encouraging friendly words from Mr Bush when the Rwandan president visited him in Washington for talks in late May. At a press conference convened after the meeting, Mr Bush praised Rwanda's troop deployment in Sudan's troubled Darfur region, and encouraged US companies to invest in Rwanda. Subsequently, on June 7th, the US and Rwanda signed a new trade agreement establishing a consultative forum to address bilateral trade issues and boost trade levels.

The Burundian government is carrying out its earlier threat to expel all Rwandan asylum seekers whose application for refugee status it has rejected (May 2006, The political scene), and by mid-June over 5,000 Rwandans had been repatriated from Ngozi and Kirundo provinces, according to the UN High Commission for Refugees (UNHCR). The UNHCR added that around 2,000 people were being repatriated a week, suggesting that by the end of July, the total may have amounted to 17,000 out of an estimated total of just over 19,000, putting the Burundian government on course to meet its own deadline of repatriating all the Rwandans by August. The UNHCR said in June that it had not recorded any returns to Burundi since the latest repatriation programme began, suggesting that would-be Rwandan asylum seekers had become more at ease with conditions at home.

Rwanda expected to respect Congolese elections

Burundi and Tanzania expel Rwandan refugees

Rwanda 17


Meanwhile, other countries in the region have also been toughening their stance towards Rwandan refugees. On June 19th, the Zambian government announced that it had started the process to revoke the status of an estimated 6,000 Rwandan refugees who fled the country after 1994, while earlier in the month it was reported that more than 500 Rwandan refugees had been forcibly repatriated from Tanzania, with many allegedly stripped of their belongings in the process by the Tanzanian armed forces. One recently repatriated Rwandan woman was reported as saying she was married to a Tanzanian and had five children born in the country, but the authorities had ordered her to go while telling him to find himself another wife. The Rwandan government is anticipating the return of more than 60,000 refugees from Tanzania in the coming months, bringing with them an estimated 80,000 head of cattle.

Economic policy

The ministry of finance, headed by James Musoni, is pressing ahead with the development of an Economic Development and Poverty Reduction Strategy (EDPRS). The EDPRS is the successor to the country's first poverty reduction strategy paper (PRSP), which expired at the end of 2005, and the process of writing it was launched by Mr Kagame at the end of January (May 2006, Economic policy). During the first half of 2006 each ministry carried out an evaluation of PRSP implementation for its sector, which were then relayed to the ministry of finance. The ministry of finance has subsequently produced a draft analysis of the findings from which will be used to generate the key issues on which Mr Musoni wants the government to focus over the medium-term. The Economist Intelligence Unit expects these issues to include an attempted structural transformation of the economy away from its current dependence on agriculture, the improved creation of non-farm employment, and, for the first time, reducing population growth�Rwanda has one of the highest population densities on the continent. This latter subject has previously been taboo with the Rwandan Patriotic Front (RPF), since the pre-1994 government often claimed that because Rwanda was "full" it was, therefore, justified in refusing to allow back home Tutsi refugees based in Uganda, among whom were included most of the RPF.

Each ministry's PRSP evaluations also contain statements of its strategic future targets, and Mr Musoni has decided to use these to develop the 2007 budget framework paper. In so doing, Mr Musoni is seeking to answer a criticism of the first PRSP by the IMF and others that it was insufficiently linked to the budgetary process, which, it is claimed, negatively affected PRSP imple-mentation. The 2007 budget framework paper will be presented to donors later this year along with an EDPRS progress report, which will result in a rare public forum of debate over what should and should not be in the budget next year. Donors have been calling for greater input into the budgetary process for some time and welcome the development, although insiders caution against expectations that the debate will result in significant changes in the ministry of finance's plans.

Preparations for new poverty reduction strategy in motion

New link between EDPRS and budget formulation

18 Rwanda


Mr Musoni's strong performance while head of the Rwanda Revenue Authority (RRA) and his proximity to the well respected former finance minister, Donald Kaberuka, encouraged a positive disposition from donors upon his arrival at the finance ministry in March. Since then, Mr Musoni has consolidated his reputation with the appointment of a competent and articulate new team of economic advisers, and particularly its head, Jean-François Ruhashyankiko, who was previously with the IMF institute and should help foster warmer relations with the IMF.

Relations between the government and the IMF have been distinctly chilly at times over the past few years, but on June 8th the Fund concluded the sixth and final review of the country's first three-year poverty reduction and growth facility (PRGF). The PRGF review was originally intended to be concluded in late 2005, but was delayed because of IMF concerns about a number of issues, including:

• significant unbudgeted government expenditure in 2005 (third quarter);

• the government's decision to guarantee debt owed by the electricity parastatal, Electrogaz; and

• the government's failure to expedite an audit of Prime Holdings, the company through which the government controversially funded the construction of the Hotel Intercontinental in the capital, Kigali (February 2006, Economic policy).

Fiscal policy came roughly back on the PRGF track in the fourth quarter of the year, the Prime Holdings audit was finally completed in December 2005, and the IMF found in the review that most PRGF benchmarks for 2005 were either met or only narrowly missed. The IMF stated that the government's macroeconomic policy implementation was "broadly on track", while progress on structural reforms was "mixed" because of what it saw as insufficient improvement to public expenditure management. The conclusion of the sixth PRGF review led to the IMF's release of a final US$850,000 tranche of credit, bringing total disbursements under the first PRGF to US$6m (a relatively low sum owing to the government's aversion to borrowing from the IMF on the grounds that it can obtain credit on better terms elsewhere).

The government requested, and the IMF has granted, a new three-year PRGF worth US$12m, which became effective on June 12th, with the government drawing an initial tranche of US$1.7m. Commenting on the new PRGF and the government's economic plans for 2006, the IMF stated that it has accepted a proposal from the government for an increased fiscal deficit, but has urged a "steadfast commitment to reform", including making improvements to the business climate and boosting the agricultural and export sectors, and has also called on the government to manage aid inflows more efficiently. Regarding monetary policy, the IMF said it wanted to see closer supervision by the National Bank of Rwanda (NBR, the central bank) of private-sector credit from commercial banks, and has cautioned against a further substantial increase in domestic debt through Treasury Bill issues, following a sharp rise in 2005 (May

New team of finance ministry advisers impresses

IMF concludes sixth PRGF review

A new deal is agreed

Rwanda 19


2006, The domestic economy) on the grounds that this would drive up interest rates and impact negatively on investment.

The domestic economy

Economic trends

The Rwandan franc traded through July at around Rwafr550:US$1, almost unchanged from its average rate during the first half of the year, and marginally stronger than the average for 2005. The main reasons were: improved export performance, strong donor inflows and the weakness of the US dollar. In the letter of intent requesting a new PRGF from the IMF, the government said it anticipated an appreciation of the exchange rate during the remainder of 2006 owing to substantial donor-funded investments in infrastructure and social sectors. Currency appreciation would help the government meet its inflation target and would mitigate the impact of higher international oil prices, but is also likely to knock export competitiveness, and the government promised the IMF it would seek to enhance export productivity to offset this adverse impact.

There was a surge in private-sector credit from commercial banks in the second half of 2005, from Rwafr120bn (US$218m) in June 2005 to Rwafr127.6bn by year-end, and the IMF, which has expressed concern about this (see Economic policy), predicts a further increase to Rwafr138bn by June 2006. Commercial banks have, however, managed to boost their reserves slightly over the same period, from Rwafr13.78bn in June 2005 to an estimated Rwafr17.2bn a year later. Another good sign is that domestic deposit levels have risen from Rwafr155bn in June 2005 to a projected Rwafr171bn in June 2006, an increase of 10%.

Average inflation for 2005 was 9.2%, notably higher than the 5% targeted by government, because of increased fuel costs. The government has once again targeted 5% for 2006. The IMF has projected 5.5% but the Economist Intelligence Unit is less optimistic and forecasts 6.7%, mainly because of uncertainties about domestic agricultural production and continued high oil prices. Year-on-year consumer price inflation rose from 7% in March 2006 to 7.5% in April 2006, the latest period for which figures are available.

Government finances recorded a Rwafr9bn (US$16.4m) surplus in 2005 according to the IMF, a result of strong tax revenues, which rose by an impressive 20.7% in nominal terms from the 2004 figure, and donor inflows, which were 34% higher in 2005 than in 2004. Expenditure was an estimated 24% higher in 2005 than in 2004, again in nominal terms. For 2006 the IMF anticipates a 2% nominal increase on the 2005 figure for tax revenue and a 9% fall in donor inflows. At the same time, the IMF expects expenditure to rise by a modest 2.6% from its 2005 level in nominal terms, resulting in an anticipated deficit of Rwafr17.4bn, which would probably be largely financed domestically.

The Rwandan franc holds its ground

Private-sector credit has continued to rise

Inflation creeps up

Strong improvement in government finances in 2005

20 Rwanda


Operations of central government (Rwafr bn)

2005 (prelim) Jun 2006 (est) Dec 2006 (forecast)Revenue and grants 349.6 213.8 332.4 Tax revenue 162.6 83.3 166.1 Grants 169.3 124.9 153.5

Expenditure 340.7 181.7 349.8 Current 214.9 121.9 214.5 Capital 121.4 53.4 128.6Balance before grants -160.4 -92.9 -170.9Balance after grants 9.0 32.1 -17.4

Source: IMF, Sixth Review Under the Poverty Reduction and Growth Facility (PRGF).

Agriculture

In April the UN World Food Programme (WFP) conducted food security assessments in the districts of the Eastern and Southern provinces it believed were most affected by poor harvests in the 2006 "A" harvest, and the USAID-funded Famine Early Warning System (FEWS) later concluded that nearly 300,000 people were "severely food insecure" and in need of assistance. Spurred on by these findings, the WFP started raising US$4.5m to buy food locally and regionally, and began distributing supplies in June. The newly established National Institute of Statistics Rwanda (NISR) has, however, taken strong exception to FEWS and WFP's analysis, disputing the accuracy of the data. The NISR alleges international agencies have exaggerated the food security issue, while asserting for itself the exclusive responsibility for statistics on the issue. An NISR-approved study on food security is due in August, which we expect to present a more benign view of the situation. FEWS data, meanwhile, showed rainfall during the 2006 "B" season to have been about 90% of the long-term average, as a result of above-average rains in late May following poor rains in April. FEWS also calculates that at least 70% of the country has had good rains. If FEWS is right, this should mean a fair 2006 "B" harvest, which will go some way to alleviating food shortages and will help make for disappointing production figures earlier in the year.

The ministry of agriculture's evaluation of implementation in the agricultural sector of the first PRSP (see Economic policy) concluded that the sector grew by an average of 4.2% a year during 2002-05, which some way below the 5.3% targeted. The traditional crops for ensuring food security apparently saw lower or stagnant production compared to other crops during this period, but significant progress was made in increasing livestock numbers after the devastation of the genocide. The evaluation also found that volumes and quality of export crops had risen markedly during 2002-05. The ministry set itself the challenge of significantly boosting productivity and output of food security crops through land reform, increased fertiliser use, effective extension services and improving farmer access to agricultural credit.

The important issues here are capacity at the ministry, the size of its budget and the minister's clout in cabinet. For years all three have been problematic, but the signs are the government is taking agriculture more and more seriously, in

Government disputes food security statistics

Agriculture ministry aims to boost food security crops

Rwanda 21


part because of the PRSP. Mr Kagame dismissed Patrick Habamenshi as agriculture minister in June 2005 (August 2005, The political scene) and Mr Habamenshi, who had never been part of the government's discreet inner-circle, is also facing corruption charges. Anastase Murekezi, his successor, is an agricultural technocrat who is well-regarded by Mr Kagame and those close to him, including Mr Musoni, and consequently he seems to be more listened to in cabinet than his predecessor. The budget allocation to fertiliser, for example, has just been increased substantially and extra funding is likely next year for agricultural extension services.

Infrastructure

Rural recapitalisation has been a mantra of economic development for several years, but the infrastructure ministry's own PRSP evaluation admitted there was "no measurable improvement" in the vast majority of rural roads, and also rural electricity provision during 2002-05. There was however, the ministry reckoned, slight improvement in the condition of roads designated as being of national and communal importance, and big improvements on the major routes during the same period. This is unsurprising, since nearly the entire national road maintenance budget has for years gone into improving main roads. The infrastructure ministry's plan is to change this, devolving more of the road maintenance budget to less eye-catching, but vitally important, rural roads, starting with any that connect to rural commercial enterprises such as tea plantations and mines. The government, meanwhile, apparently holds out little hope that much methane gas will be extracted from Lake Kivu and converted into electricity in 2007, forecasting just 35mw for the year. The energy ministry hopes, if it gets a sufficient budget allocation, to boost total output further with the rehabilitation of three hydroelectric stations and the construction of two new ones to help meet growing demand, and enable important new extensions to the national grid.

Jersey-based Terracom, which acquired telecommunications parastatal Rwandatel in June 2005 (August 2005, Economic policy) and also operates as an internet service provider, launched a mobile phone service on May 24th, ending the nine year monopoly of MTN-Rwandacell, the Rwandan subsidiary of South Africa's MTN. Relations between the two operators began badly, with MTN declining to carry Terracom calls until Terracom sorted out alleged outstanding issues with the Rwanda Utility Regulation Authority (RURA), but the issue was resolved, apparently amicably, a month later. MTN has over 300,000 subscribers and currently offers far greater network coverage than Terracom. Terracom on the other hand, which hopes for 100,000 subscribers by the end of the year, is very competitive on price and promises technology convergence, particularly between the Internet and mobile telephony. The end result is positive for consumers, although doubts remain about RURA's capacity to regulate the telecoms industry effectively, particularly since all its major decisions need to go to the government for ratification.

Ambitious plans for rural recapitalisation

Terracom ends MTN-Rwandacell's monopoly

22 Rwanda


Foreign trade and payments

The parastatal national coffee office (OCIR-Café) in early July forecast coffee exports of 26,000 tonnes for 2006, up significantly from the 18,000 tonnes it recorded as exported in 2005. Only around 1,000 tonnes of Rwanda's coffee exports were fully washed in 2005, but the commerce ministry's plan is to build 70 new washing stations and boost the figure to 10,000 tonnes. The ministry also wants to boost fertiliser use, plant 4m new trees and produce 120,000 "high performing" seedlings, a programme it has been provisionally costed at Rwafr5.4bn. Fully washed Rwandan arabica currently commands a premium price of US$2.9/kg on international markets, whereas semi-washed arabica sells for just US$1.5/kg.

The IMF announced 100% debt relief for Rwanda in December 2005 (February 2006, Foreign trade and payments) and the World Bank announced the same in March 2006 (May 2006, Foreign trade and payments). The IMF expects the country's total external debt to fall from US$1.5bn in 2005 to US$354m by the end of this year, but to rise again to US$600.7m by 2008, with most of the debt being owed, as currently, to the World Bank. Because so much of the debt being forgiven is concessional, the country's debt-servicing requirement as a percentage of the export of goods and services is expected to fall just 2.2 percentage points to 5% by the end of 2006, and to remain around this level for the next three years.

The net present value (NPV) of the country's debt will fall from 150% in 2005 to 66% in 2006, but the IMF and World Bank's joint debt sustainability analysis anticipates it will be back up to 150% by 2014 and that Rwanda will be "at a high risk of debt distress" beyond this date. When the Bretton Woods institutions announced their debt relief the Economist Intelligence Unit expected it would prove largely resource-neutral as they might simply subtract the foregone debt-service payments from future lending (May 2006, Foreign trade and payments). Latest IMF projections on public current transfers to Rwanda�most of which come from the World Bank�appear to confirm this, with US$348.5m given in 2005, US$296.5m anticipated for 2006, and just US$207m projected for 2008, or 60% of its 2005 level.

According to the latest figures for 2004, published in the World Bank's Global Development Finance, Rwanda's external debt grew strongly again, by 9%, and was 33% higher than in 2001. All of the additional debt was from multilateral agencies at concessionary rates of interest. The ratio of debt to gross national income declined slightly over the year, to 91.3%, although this compares unfavourably with the 2001 level of 76.5% and emphasises the need for debt relief. Rwanda's debt-service ratio seems to be on a downward path, however, dipping below 10% in 2004 (according to the IMF).

Coffee exports rise

Debt-relief savings set to be cancelled out by aid reduction

External debt increased again in 2004

Rwanda 23


Rwanda: external debt (US$ m unless otherwise indicated)

2001 2002 2003 2004Public & publicly guaranteed long-term debta 1,165 1,307 1,418 1,545 Official creditors 1,164 1,305 1,416 1,543 Multilateral 1,016 1,157 1,269 1,402 Bilateral 147 148 147 141 Private creditors 1 1 2 2Short-term debt 36 45 30 18 Interest arrears on long-term debt 17 17 18 18Use of IMF credit 84 85 92 92

Total external debt 1,285 1,437 1,540 1,656Debt service 18 17 21 24

Ratios (%) Total external debt/GNI 76.5 83.9 93.1 91.3Debt-service ratiob 10.3 12.0 11.1 9.6

Short-term debt/total external debt 2.8 3.2 2.0 1.1Concessional long-term debt/total external debt 90.5 90.8 92.0 93.2

a Long-term debt is defined as having original maturity of more than one year. b IMF figure; debt service as a percentage of exports of goods and services.

Sources: World Bank, Global Development Finance; IMF, Sixth Review Under the Three-Year Arrangement Under the Poverty

Reduction and Growth Facility (PRGF).

rwanda - international university of japan · 2007-08-27 · rwanda 1 country report august 2006...

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