World Bank gives US $50 million for poverty reduction

Rwanda received a grant of US $50 million from the World Bank on Tuesday to help implement programmes aimed at cutting the high poverty levels faced by millions of people in the country.

The World Bank also gave Rwanda a $15-million credit with a 40-year maturity period, which includes a 10-year grace time.

Rwandan Finance Minister Donald Kaberuka and the World Bank country director for south-central Africa and the Great Lakes region, Emmanuel Mbi, signed the agreement in the Rwandan capital, Kigali, on behalf of the two parties.

Mbi said the money would help Rwanda stabilise its macroeconomic framework and foster a favourable private sector investment climate, in addition to promoting exports.

"This money should also strengthen the financial sector, promote transparency and accountability, and advance the privatisation programme," he added.

Kaberuka said the funds would help cover Rwanda's remaining 2004 fiscal year budgetary gap and support the country's 2005 fiscal year budgetary needs.

Rwanda's poverty reduction programme, designed in 2002, aims to increase GDP per capita from $230 to $900, thus bringing Rwanda’s 60 percent poverty rate – from a population of 8.1 million people – to 25 percent. This would also increase literacy rates from 48 percent of the population to 90 percent.

The World Bank has commended Rwanda's economic recovery 10 years after a genocide, in which 937,000 people were killed, according to government figures.

A World Bank statement indicated that between 1995 and 2002, the average annual GDP growth rate was 7 percent, with social spending increasing to 6.2 percent of the GDP in 2003 from 3.9 percent in 1999. This was mainly due to funding, largely from donors, and reconstruction efforts.

"A blend of grant-credit support under this project is essential for Rwanda to sustain its economic and social recovery and transform its economy, including developing exports, addressing debt sustainability concerns and reducing dependence on foreign aid," the World Bank said.