Somali Magazine– Rwanda is yet to receive $262 million from the International Monetary Fund (IMF) in a mission to help the East African country deal with the balance of payment pressures from climate shocks. The IMF said on Tuesday that it has agreed to facilitate the Rwandan government with a 14-month credit fund after a review scheduled for December.
Additionally, the IMF staff and Rwanda agreed on policies to be used in completing the second review of an already existing Policy Coordination Instrument and a programme under the Resilience and Sustainability Facility.
“Repeated droughts, the severe floods in May 2023, and tightening global financing conditions are compounding the challenges from the legacy of the COVID pandemic,” the IMF said, adding that the new facility would help Rwanda undertake flood-related reconstruction efforts.
The IMF-Rwanda deal comes amid preparations for the 28th United Nations Climate Change Conference of the Parties (COP28), scheduled to take place in the United Arab Emirates (UAE).
The COP28 plan calls for loss and damage funding, a “package” on Just Energy Transition Partnerships, and additional climate finance for fragile and conflict-affected areas.
To accelerate climate change adaptation in Rwanda, the IMF said Rwanda and international banks have set plans to raise an additional 300 million euros ($319.62 million), a budget that will help the country build a more climate-resilient environment.
The Rwandan Central Bank Governor, John Rwangombwa, however, said that the National Bank of Rwanda is utilizing every opportunity to defuse the country’s inflation.
“We are committed to bringing back inflation to our band around the 5 per cent benchmark that we follow. So we have agreed on that. We have also agreed to maintain a flexible exchange market as it is today,” he said.
Despite the country’s overall positive growth and development over the past 25 years, Rwanda is still highly vulnerable to impacts from climate change due to its high dependence on rain-fed agriculture and the need to improve its road networks, health sector, and water resource management.
In Rwanda, the high levels of poverty and low degree of development limit the capacity of poor households and communities to manage climate risk, increasing their vulnerability to climate-related shocks.
In an effort to record downward inflation, the Central Bank, however, in June developed a benchmark trend, raising by 50 basis points to 7.7 per cent. In July, inflation had fallen as low as 11.9 per cent but further picked up to 12.3 per cent in August and again to 13.9 per cent in September.