Economic discipline likely to bring IMF reward

The IMF has begun a detailed analysis of Rwanda’s economy and debt and expects Rwanda to benefit from substantial debt relief under the expanded Highly-Indebted Poor Country (HIPC) initiative agreed by the G-7 richest countries last week, an IMF spokesman told IRIN on Monday. The Rwandan economy has performed well for the past two years despite the difficult legacy of the 1994 genocide and its involvement in the DRC conflict, and it was expected to receive debt relief next year, coming into effect in the year 2001, as a reward for its good economic performance, the spokesman said. The IMF did not quantify the potential scale of debt relief but the international campaigning group Jubilee 2000 has estimated a saving in debt-service payments of between a half and two-thirds when Rwanda joins the HIPC scheme. Rwanda’s planned replacement of damaging trade taxes with a value-added tax (VAT) on goods and services would have significant economic impact by boosting badly-needed government revenue while reducing tax evasion and corruption, the spokesman said. All in all, he added, Rwanda had “resisted the temptation to let its budget run out of control to finance the war effort in DRC” and, despite some problems, its economic growth, low inflation, sustained social spending and compliance with agreed IMF/World Bank economic targets was “impressive.”