Rwanda needs to bolster domestic revenues to finance its development targets without placing strain on the budget, the International Monetary Fund said. Rwanda aims to become a middle income country by 2020 but relies on external funding, including aid, for about 40 percent of its budget.
“Fiscal policy will need to focus on domestic revenue mobilization to finance the authorities’ ambitious development goals,” the International Monetary Fund said in a statement late on Monday.
“Aligning spending with available resources and judicious selection and financing of investment projects will minimise risks to the budget.”
Reducing further the costs of doing business and addressing infrastructure bottlenecks would support economic diversification, encourage private sector growth and broaden the export base, the IMF said.
President Paul Kagame has won praise for transforming the economy since the 1994 genocide. In a vote of investor confidence, Rwanda’s debut Eurobond in April was oversubscribed.
The Washington-based body said the landlocked east African country’s economy was on track to expand 6.6 percent this year before accelerating to 7.5 percent in 2014.
Inflation was seen rising to 6.5 percent by the end of 2013, reflecting rising food prices after a poor second harvest, the IMF said. Consumer prices in the country’s urban centres rose 5.10 percent in the year to October.