Kigali keeps repo bank rate unchanged

Rwanda's central bank has retained the key central bank repo rate unchanged, at 4.5 percent, to further support lending to the economy.. PHOTO | FILE | NATION MEDIA GROUP

By BERNA NAMATA

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Rwanda has retained the key central bank repo rate unchanged, at 4.5 percent, to further support lending to the economy.

Briefing the press on Thursday after the quarterly Monetary Policy Committee meeting, governor of the National Bank of Rwanda John Rwangombwa said “The continued recovery of Rwanda’s economy is supported by sizeable fiscal and monetary policy measures, and continued vaccine roll out.”

The country expects a strong economic rebound this year after suffering a contraction that led to the first recession in over two decades, blamed on the pandemic. Real GDP is projected to get above 6 percent in 2021, buoyed by vaccinations that allowed the gradual reopening of the economy. Real GDP growth contracted by 3.4 percent in 2020.

In 2021, inflation remains low, at slightly below zero due to stable food prices and transport, while inflation is expected to rise to 5 percent, largely driven by prices of imports — particularly fuel despite the government maintaining a fuel subsidy.

Infrastructure spending

Without giving definite figures, Mr Rwangombwa expressed optimism that the economy will continue on a growth trajectory with the real Composite Index of Economic Activities expanding by 10.3 percent in the third quarter and hinted that the projections could be revised by the National Institute of Statistics of Rwanda, which is expected to released GDP figures next week.

Increased lending to the private sector is expected to continue supporting growth as local banks’ capital and liquidity levels remain sufficient with the aggregate total Capital Adequacy Ratio, a measure of how much capital a bank has available, reported as a percentage of a bank’s risk-weighted credit exposures was estimated at 22.2 percent, over 7 percentage points above the minimum requirement of 15 percent.

“We have recorded double-digit growth on all key performance metrics and have kept a prudent stance with regards to impairments,” he said.

The economy is projected to rebound in the current year with a positive outlook through to 2022, supported by high infrastructure project spending and a pickup in the manufacturing and service sectors as the effects of the pandemic dissipate.