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Recent Macroeconomic
Performance and Prospects
Monique Nsanzabaganwa
Minister of State, Economic Planning
Outline

Output Overview

Fiscal Performance

Export Performance

Monetary and Financial Performance

Outlook for 2007
Output Overview - GDP Performance
2005
2006
Real GDP
Real Annual
Growth Rate
1,197.2 bln Rwf
6.0%
1,266.7 bln Rwf
5.8%

Real GDP rose 69.5
bln Rwf leading to an
annual real GDP
growth rate of 5.8%
for 2006.

Agricultural from 1.9
to 1.4% and industrial
growth 1.8 to 1.3%

Service sector growth
increased from 7.2%
to 8.4% over the year.
Real GDP (Bln RwF, base year 2005) and Percentage
Composition by Sector


Rwanda remains an agricultural-based economy, however the service sector
is accounting for a greater share of the GDP in real terms. Proportion of
real GDP originating from agriculture fallen from 40.3% to 39.3%, while,
the service sector has risen from 38.6% to 39.6% of real GDP in 2006.
Share of real GDP coming from the Industry sector remains at 19%.
Sectoral Contribution to GDP Growth in 2006
Exp o r t C r o p

Slower growth in
Agricultural food
crops offset by
increased growth
in exports crops
such as coffee.

Industrial sector
was buoyed by
growth in
Manufacturing.

The Service
sector has been
a significant
driver for growth
in 2006
particularly
Wholesale &
retail trade,
Transportation
and Professional
services.
Ot her A g r icult ur e
M anuf act ur ing
C o nst r uct io n
Ot her Ind ust r y
W ho lesale and r et ail
t r ad e
T r ansp o r t , f r eig ht
and lo g ist ics
F inancial and
Pr o f essio nal Ser vices
Ot her Ser vices
-4
-2
0
2
4
6
A nnual chang e in b ln R wF
8
10
12
14
Agriculture productivity Enhancement
Agriculture productivity largely affected by climatic
conditions. To address this:









Master plan for irrigation under preparation
Marshland management
Agriculture intensification and increased fertilizer use
Land reform
Institutional framework established (RADA, RALDA,
Horticulture Board, etc)
One cow per poor household- GIRINKA
Food storage and post harvest management
Terracing project (100Ha per District IMIHIGO 2006)
Rain water storage systems
Improvement in Service and manufacturing
Sector Performance
Despite strong growth………enhancement through







Stabilization of the energy crisis (Thermal energy, though
expensive)
Investment in methane will increase production while
lowering the cost
Hydro power plants (Rukarara and Nyaborongo), Microhydro plants being constructed
Energy tariff structure revised in favor of industrial users
Policy on financial sector development plan approved by
Cabinet and BNR law revised to strengthen
Micro-finance policy adopted and implementation strategy
being drafted
Procurement reforms
Fiscal Performance - Public Finances
Level of revenue and grants rose by 24 bln Rwf over the year but fell as proportion of GDP as financing from
budgetary grants reduced. Total expenditure rose by almost 30 bln Rwf, current expenditure rose due to
priority requirements and capital expenditure fell as proportion of GDP. Priority expenditures continued to
increase. Therefore, both the Primary and Domestic Fiscal balance deficit increased, to 3% and 7% of GDP,
respectively.
2005
bln Rwf
2006
Percentage of
GDP
bln Rwf
Percentage of
GDP
Revenue and grants
349.4
29%
374.3
28%
Revenue
180.3
15%
197.9
15%
Tax revenue
162.6
14%
186.1
14%
Non-tax revenue
17.7
1%
11.8
1%
Grants
169.1
14%
176.4
13%
Total expenditure and net lending
340.7
28%
374.5
28%
Current expenditure
214.9
18%
251.4
19%
of which: Wages and salaries
51.2
4%
61.7
5%
of which: Goods and services
64.5
5%
70.0
5%
Capital expenditure
121.4
10%
111.4
8%
Primary balance
-23.6
-2%
-39.2
-3%
Domestic fiscal balance
-67.6
-6%
-89.7
-7%
Strong Revenue Performance………………..

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
Tax administration and collection efficiency
Larger tax base due to improved economic
growth
Tax payer compliance
Customs IT network and RRA computerization
Private sector growing due to improved business
environment (Magerwa, update of business
laws, institutions…..)
Result-oriented budget

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Project planning and implementation improved
Increased priority spending (education, health
and infrastructure) to 144 bln Rwf in 2006
PFM reforms (OBL, financial regulations, budget
reclassification, audit, training accountants and
auditors, procurement law, …)
Fiscal decentralization policy adopted and
implemented
Fiscal Performance - Debt
2005
2006
72.6
15.7
Exports of goods and services
5.9
2.9
Government revenue
4.5
2.3
Government current expenditure and net lending
2.4
1.2
283.1
155.4
149.8
58.2
Total debt stock (in percent of GDP)
Debt service after Debt Relief (in percent of)
Net present value (NPV) of debt (in US$ million)
NPV of debt-to-exports ratio

Rwanda is in a more sustainable position in terms of external debt in 2006.
Debt relief has been received via HIPC Initiative and MDRI.

Debt stock has been reduced and now stands at 15.7% of GDP.

Of particular importance is the improvement in the NPV of debt-to-export
ratio which stood at 149.8% of GDP in 2005 and now is reduced to 58.2%
in 2006.
Enhancing Debt Management
Debt committee operational for regular
assessment of DSA
 Electronic link between BNR and
MINECOFIN for debt database
management
 Export promotion and diversification
 Increased grant financing

Export Performance
(bln Rwf)
2005
2006
Annual
Growth
Exports, f.o.b.
69.7
74.6
7.1%
Of which: coffee
21.3
28.6
33.9%
Of which: tea
13.6
19.1
40.5%
-197.3
-237.5
20.4%
Of which: equipment
-61.3
-67.2
9.7%
Of which: energy and fuel
-43.6
-59.2
35.8%
-127.6
-162.8
27.7%
Imports, f.o.b.
Trade balance

Tourism increase from $ 49million to $60 million. Mining decline from $37million to
$32 million in 2006.

Rises in imports of capital equipment, energy and fuel show positive signs for
growth in productive imports rather than final consumption goods.

Future plans for exports include an Export Processing Zone and diversification into
commodities such as horticulture.
15
Monetary and Financial Performance - Inflation and
Exchange Rate.
 Inflation fell to 9%
13
11
9
7

5
2005
Sept
Aug
July
June
May
Apr
Mar
Feb
Jan
Dec
Nov
Oct
Sept
Aug
July
June
May
Apr
Mar
Feb
Jan
3
2006
Inflation %
in September 2006
from the 12% high
at start 2005.
Remains high due
to energy and food
prices.
Annual average for
2006 is expected to
fall to around 7.5%.
Underlying inflation
was 4.6% end Oct.
06
RwF / USD Exchange Rate Development

Exchange rate has
appreciated against
the dollar in 2006.

2006 annual
average projected
at 555Rwf / USD.
570
565
560
555
550
545
2005
2006
Sept
Aug
July
Jun
May
Apr
Mar
Feb
Jan
Dec
Nov
Oct
Sept
Aug
July
June
May
Apr
Mar
Feb
Jan
540
Monetary and Financial Performance – Credit to the
Private Sector.

18% growth in
the credit
disbursed to the
private sector

‘Commerce,
restaurants and
hotels’ received
the greatest
proportion,
around 40% of
total up to July
2006.

While ‘Public
works and
buildings’
accounted for
25%.
Unclassified
Local community services
Insurance, banking and services
Transport, storage and communication
Commerce, restaurants and hotels
Public works and buildings
Energy and Water
Manufacturing industries
Mining
Agriculture, forestry, fishing
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Outlook for 2007

GDP growth to rise to 6.4% and Inflation targeted at 5.0%

Domestic financing, if required, to preserve macro stability.

Shift from loan to grant financing will help sustain debt position.

Budget prioritization process to achieve goals in poverty
reduction.

Fiscal decentralization to deepen with earmarked transfers to
districts.

EDPRS results based budget expected to boost economic growth
and social development.

EAC accession to integrate economy and widen market access.
Outlook for 2007 – Policy and Reforms

Real and External sectors
- Trade Promoting Policy
- Productivity enhancement
- Public / private partnerships

Fiscal sector
- Tax base broadening
- Tax administration efficiency

Monetary and Financial sectors
- Long term loans (See FSDP)
- Stricter accounting and auditing (PFM)
- Microfinance promotion
THANK YOU FOR YOUR KIND
ATTENTION