INTERNATIONAL MONETARY FUND AND
THE INTERNATIONAL DEVELOPMENT ASSOCIATION
RWANDA
Decision Point Document for the Enhanced Initiative
for
Heavily Indebted Poor Countries (HIPC)

December 11, 2000

Table of Contents
I. I

II. Assessment of Eligibility
A. PRGF and IDA Status
B. Macroeconomic Performance and Structural Reforms
Policies during the emergency phase 1995-97)
Policies in the transition phase (1998-2000)
C. Poverty and Social Policies
D. National Reintegration and Reconciliation

III. The Challenge of Poverty Reduction
A. Justice and Governance
B. Regional Issues
C. Macroeconomic Policies
D. Structural Policies
E. Human Resource Development
F. Issues and Policies in Key Sectors
G. Monitoring Poverty and Social Indicators

IV. Debt Sustainability Analysis and Assistance Under
the Enhanced HIPC Initiative
A. Debt Sustainability Analysis
B. Assistance Under the Enhanced HIPC Initiative
C. Conditions for a Floating Completion Point
D. Sensitivity Analysis
E. Use and Monitoring of HIPC Debt Relief
F. Benefits from the Implementation of the Enhanced
HIPC Initiative

V. Issues for Discussion

Introduction:

1. This paper presents a decision point assessment of
Rwanda™s eligibility for assistance under the
Initiative for Heavily Indebted Poor Countries (HIPC).
The Executive Boards of the IMF and IDA discussed the
preliminary HIPC document (EBS/00/144 and
IDA/R2000-140) on July 31 and August 4, 2000
respectively, and made a preliminary determination
that Rwanda is eligible for assistance under the
enhanced HIPC Initiative, in view of its status as a
PRGF-eligible and IDA-only country, its satisfactory
track record of macroeconomic and structural reforms
despite the challenges of its post-conflict situation,
and the unsustainable level of its external debt
burden, even after taking into account debt relief
provided under traditional mechanisms. Directors
agreed that Rwanda could reach the decision point
under the Initiative in late 2000, following
completion of the second review under the second
annual PRGF arrangement and approval of a third annual
PRGF arrangement, and the completion of an interim
Poverty Reduction Strategy Paper (I-PRSP).

2. During the discussion of the preliminary HIPC
document, Directors of both Boards acknowledged
Rwanda's progress in stabilizing its economy and noted
in particular the sustained real GDP growth, low
inflation, and continued shift in budgetary resources
toward the social sectors. They commended the
authorities for their commitment to structural reforms
in the areas of trade liberalization, tax reform,
budget preparation and control, financial sector
restructuring, and civil service reform. Directors
noted the need to consistently improve fiscal revenue
collection, as this is essential for ensuring the
sustainability of Rwanda's social and other
antipoverty spending programs in the medium term while
allowing a decline in its heavy dependence on external
aid and achieving debt sustainability. They also
emphasized the importance of enhancing the level and
efficiency of social and antipoverty spending and
prioritizing expenditures in the budget through the
implementation of the medium-term expenditure
framework (MTEF). Directors noted the challenges
remaining in budget preparation, monitoring, and
control and encouraged the authorities to continue
their efforts in these areas. They emphasized the
importance of putting in place safeguards to ensure
the effective use of budget savings coming from debt
relief.

Directors noted that Rwanda faces deeply entrenched
poverty, which will require perseverance in and
consistent implementation of appropriate macroeconomic
and structural policies to put in place the conditions
that would generate private sector-led growth and thus
sustainably improve living standards.

3. Discussions on the second review under the second
annual PRGF and on a program that could be supported
by a third annual PRGF arrangement were held during
October 19 November 6, 2000 and an ad referendum
agreement was reached. The authorities have prepared a
satisfactory I-PRSP with the participation of civil
society and the donor community, and the final PRSP is
expected in September 2001.

4. The rest of the paper consists of four sections.
Section II discusses Rwanda's IDA/PRGF status and
eligibility under the HIPC Initiative and examines
Rwanda's implementation record under previous and
ongoing programs supported by the IDA's Economic
Recovery Credit and the IMF's three-year PRGF
arrangement. Section III outlines the macroeconomic,
structural and social objectives of the medium-term
program. Section IV provides an update of the debt
sustainability analysis (DSA). Section V presents the
staffs' recommendations and suggests issues for
discussion by Executive Directors.

Read the full document (PDF; 60 pages) from:
http://www.imf.org/external/NP/hipc/2000/rwa/rwadp.pdf