All end-December 2019 quantitative targets for the second review under the PCI [1] were met and performance on the reform targets was broadly on track; the heavy toll of the COVID-19 pandemic has pushed the fiscal targets for end-June 2020 out of reach and hampered progress in advancing the reform targets agenda; going forward, the authorities need to implement measures to ensure a growth-friendly fiscal consolidation to safeguard debt sustainability as soon as the crisis abates.

The COVID-19 pandemic has had a severe economic impact on Rwanda through the implementation of strict domestic measures to contain the spread of the virus and the related global spillovers. The authorities have responded by rolling out health and economic measures totaling USD 311 million (3.3 percent of GDP) to mitigate the economic fallout on businesses and households. To help address the urgent balance of payments need arising from the pandemic, the Executive Board approved on April 2 and June 11, 2020 the authorities’ consecutive requests for emergency financing under the Rapid Credit Facility (RCF) totaling SDR 160.2 million, equivalent to 100 percent of quota (IMF Country Reports No. 20/155 and No. 20/207 ).

All end-December 2019 quantitative targets for the second review were met and performance on the reform targets was broadly on track. The end-December 2019 reform target aiming at automating the risk-based verification process for tax refund claims was delayed as the technical support required to implement the project could not be secured ahead of the target date. The deterioration in the fiscal position from revenue losses and increased spending to address the impact of the pandemic have made the fiscal quantitative targets for end-June 2020 unattainable. Progress in advancing reform targets was also partly hampered by disruptions from COVID-19 and the need to divert resources and efforts to mitigate the fallout from the pandemic. The assessment of program performance at end-June 2020 will be confirmed at the upcoming third PCI review. Going forward, the authorities need to implement measures to ensure a growth-friendly fiscal consolidation to safeguard debt sustainability as soon as the crisis abates. They should also continue to ensure transparency of COVID-19-related financing and spending.