Macroeconomic Forecast Rwanda

We expect a recovery in growth, after it hit a seven-year low in 2003 due to a combination of poor harvests and low commodity prices. We anticipate growth of at least 5.0% this year and 6.8% in 2005, with downside risks posed by further external shocks, but with an improving outlook for coffee prices strengthening the prospects for exports. Government spending is likely to remain high, with new recurrent expenditure on education and health, although demobilisation will reduce the public sector wage bill by 2005. Donor dependence continues, with 55% of the 2004 Budget set to be financed by foreign aid and loans, and the possibility that donors will not deliver on their commitments poses a downside risk. As revenues raised by local governments are not systematically reported, the data on public spending is incomplete.

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