VZCZCXYZ0000
RR RUEHWEB

DE RUEHLGB #0224 0860645
ZNR UUUUU ZZH
R 260645Z MAR 08
FM AMEMBASSY KIGALI
TO RUEHC/SECSTATE WASHDC 5197
INFO RUEHNR/AMEMBASSY NAIROBI 1167
RUEHDR/AMEMBASSY DAR ES SALAAM 1082
RUEHJB/AMEMBASSY BUJUMBURA 0268
RUEHKM/AMEMBASSY KAMPALA 1850
RUEHFR/AMEMBASSY PARIS 0444
RUEHKI/AMEMBASSY KINSHASA 0403
RUEHDS/AMEMBASSY ADDIS ABABA 0160
RUEHLO/AMEMBASSY LONDON 0190

UNCLAS KIGALI 000224 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR AF/C 
DEPARTMENT PASS USTDA: EEBONG 
DEPARTMENT PASS USTR: WJACKSON 
DEPARTMENT PASS COMMERCE: RTELCHIN 
DEPARTMENT PASS OPIC: BCAMERON 
ADDIS FOR LISA BRODEY 
 
E.O. 12958: N/A 
TAGS: EFIN ECON PGOV EINV ENRG ETRD EPET BTIO RW
SUBJECT: IMF POVERTY REDUCTION AND GROWTH FACILITY 
ARRANGEMENT REVIEW 
 
 
¶1. A recent IMF mission concluded a two-week Poverty 
Reduction and Growth Facility (PRGF) review with an 
overall assessment that Rwanda's economy continues to 
perform well, reaching 6 percent Gross Domestic Product 
(GDP) growth in 2007.  This was the IMF's fourth review 
under the three-year arrangement. 
 
¶2.  At a March 18 briefing, the IMF identified the main 
challenge for the Rwandan economy as maintenance of 
macroeconomic stability and low inflation in the face of 
increasing international prices, higher transport costs 
of imports and scaling up in government spending.  The 
review gave special attention to the impact of higher 
transport costs for imports and exports, stemming in part 
from higher energy prices as well as higher costs 
resulting from civil strife in Kenya, through which most 
goods transit to and from this land-locked country. 
Releasing a portion of Rwanda's strategic oil reserves 
helped mitigate the impact of higher energy costs on the 
economy, but refueling the stocks could significantly 
increase government spending. 
 
¶3.   Additionally, the impact of higher food prices - the 
Food and Agriculture Organization reports that last year 
the cost of food rose almost 40 percent globally - was 
reviewed.  A bumper harvest from the just-conclude short- 
rains "A" season, estimated at fourteen percent above 
last year's harvest, is good news for the Rwandan 
consumer.  Normally a net food importer, the IMF 
indicated this may be the first year for some time that 
Rwanda does not have to import basic food stuffs. 
Despite transport, energy and food price increases, 
inflation declined and remained in single digits by the 
end of the year.  The IMF team forecasted GDP growth in 
2008 between 5.5 percent and 6.5 percent, although 
Government's projection is closer to 7 percent.  The 
review concluded that the economic policy performance was 
satisfactory with the GOR's fiscal program broadly on 
track, despite an up-tick in the latter part of last 
year.