Tuesday 18 May 2021
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newtimes - 1 month ago

Editorial: IMF debt relief is welcome, it should increase access to Covid-19 stimulus

The Covid-19 pandemic has had severe consequences on the Rwandan, just as it has on other countries globally. From the economic perspective, the virus led to the contraction of year-on-year output by 3.6 per cent in the third quarter of 2020. The Covid-19 control measures and a lockdown in the first quarter of 2021 have threatened to delay the much-needed economic recovery. The social impact of the pandemic is expected to be significant, with official available estimates suggesting that up to half a million people could fall into poverty in the absence of any intervention. In part, this prompted International Monetary Fund (IMF) to offer a combined debt relief of $71.23 million to Rwanda. This is a welcome move as it will increase liquidity and avail resources to tackle the pandemic while accelerating economic recovery. Economic policymakers should thus consider negotiating a similar arrangement with other creditors. The IMF assessment shows that through the Catastrophe Containment and Relief Trust (CCRT), Rwanda has sustained strong public health response by containing the spread of the virus and maintaining fatality rates significantly below other sub-Saharan Africa countries. In addition to this, the Fund says that Rwanda is pursuing appropriate macroeconomic policies to address the pandemic. Rwanda has also been transparent on how it uses foreign-sourced funds meant to fight the virus and its impact. The resources freed through the debt service relief are being properly used to help provide emergency health, social and economic support to the economy to mitigate the impact of the pandemic on the livelihoods of the population. With the debt relief, the government will now have more resources for social services. Business will increasingly have easier access to credits and investment capital. The relief should increase the country’s capacity to provide more stimulus to struggling businesses.


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