The Rwandan franc has shown signs of being in such a dangerous situation, having been under pressure, depreciating by 9.7% against the US Dollar, resulting to high trade deficit due to high demand of dollar by some big projects, Central Bank says.
The depreciation has been caused by the mismatch between a high import bill and low export revenues as well as high demand for dollars from different companies and governments’ projects which need to mobilize hard currency form the domestic market.
The concern was raised on Wednesday, during the Central Bank’s Monetary Policy and Financial Stability Statement 2017, which intends to inform the public the current and foreseeable economic developments and therefore give the outlook for 2017.
So far, the dollar’s value has seen an incredible rise on the international scene and this has affected the entire world’s economy.Trade balance improved by 5.9 per cent while there has been an increase of exports at 7.1 per cent, while imports have reduced to 2.4 per cent while imported inflation increased on average from 1.1% in 2015 to 4.7% in 2016.
Though tea and coffee remain important, impact of mineral prices had a significant impact on traditional exports.Meanwhile, total new authorized loans to the private sector increased by 6.3% in 2016 compared to 13.7 percent in 2015 and has seen commerce, hotels and restaurants remain the most financed economic sectors representing 44.7 per cent the total authorized loans in 2016, followed by public works and buildings at 24.7 per cent and non-classified activities at 9.9 per cent dominated by personal loans.
In EAC, inflation remained moderate due to reducing pressures on regional currencies despite pressures from food and oil prices as Rwanda, and Uganda remained the engine of the strong EAC economic performance.
Sluggish world economic performance mainly weighed down by lower commodity price and the slowdown and economic rebalancing in China hence spillover effects on other economic .The World Economic growth has therefore reportedly decelerated from 3.2% in 2015 to 3.1% in 2016. It is, however, projected to improve to 3.4% by end 2017.The government of Rwanda considers financial inclusion as an integral enabler for achieving its development and poverty reduction objectives.
Findings reveal that the financially included population has shown an incredible increased from 42 per cent in 2008 to 72 per cent in 2012 and to 89 per cent in 2015.
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