GDP down, inflation up

A report by the International Monetary Fund says Rwanda’s Gross Domestic Product (GDP) decreased last year, while inflation rose slightly. The report, dated 27 March 2001, noted that Rwanda’s real Gross Domestic Product “decelerated” to an estimated 5.2 percent in 2000, from 5.9 percent in 1999, on account of drought in some areas, the rise in international petroleum prices and transportation costs, as well as lower economic activity in the sub-region. Rwanda’s 2.4 percent inflation rate in 1999 rose to 2.8 percent by September 2000, partly on account of higher fuel prices, it said. The external current account deficit widened from about 15.3 percent of GDP in 1999 to 16.8 percent of GDP in 2000, reflecting weaker coffee export receipts, higher fuel and food import prices, an increase in international transport costs, and a relaxation of monetary policy. According to the report, government expenditure is set to increase to 20.5 percent of GDP in 2001 from 19.6 percent of GDP in 2000, reflecting increases in antipoverty spending to 4.9 percent of GDP (from 4.1 percent in 2000) and capital expenditure to 7.6 percent of GDP (from 7 percent in 2000). It noted that military spending will be reduced to 3.2 percent of GDP (from 3.8 percent in 2000). It said that despite a projected improvement of the current account, “a very significant share of grants in total foreign financing will be needed for a number of years in order to achieve debt sustainability”.