World Bank: How the pandemic impacted Rwanda's economy

As the COVID-19 pandemic continues to impact economies around the world, Rwanda has not been immune to the challenges. The World Bank's Country Manager for Rwanda, Rolande Pryce, discussed the country's economic situation in a recent interview with CNBC Africa. Rwanda, which was projecting a GDP growth rate of 8% for the end of 2020, saw its prediction revised to a contraction of 0.2% after the onset of the pandemic. This significant drop highlighted the country's vulnerability to external shocks and the need for a resilient and sustainable recovery plan. One of the key challenges facing Rwanda's economy is the fiscal deficit, which stood at 9.4% in 2020. This deficit was mainly driven by lower revenue mobilization due to reduced economic activity and increased government spending to address the impact of COVID-19. In the short term, Pryce emphasized the importance of continued government expenditure to support health initiatives and revive economic activity. However, in the medium term, she stressed the need for improved fiscal policy management, including greater revenue mobilization and efficient financial management to ensure sustainable growth. Another critical aspect of Rwanda's recovery strategy is the focus on human capital development. Pryce highlighted the importance of strengthening essential services in health, education, and social protection. In the health sector, Rwanda has been commended for effectively managing the COVID-19 crisis and keeping infection rates low. Moving forward, Pryce emphasized the need for a resilient health system that can address both immediate health crises and long-term health challenges, such as non-communicable diseases. In the education sector, the pandemic has led to prolonged school closures and disrupted learning. Pryce underscored the importance of ensuring a safe return to school for students by implementing health protocols and providing remedial support to mitigate learning losses. Additionally, she emphasized the need to track and support vulnerable students, especially girls, who may be at risk of not returning to school due to economic pressures. The interview also delved into the impact of the pandemic on Rwanda's employment landscape. Pryce noted that unemployment levels had initially spiked to 22% but had since receded to pre-COVID levels. However, many employed individuals faced reduced incomes, which posed challenges for vulnerable families. Pryce acknowledged the government's efforts to support private sector companies, particularly in the tourism industry, to weather the economic impact of the crisis. Lastly, Pryce addressed concerns about Rwanda's rising public debt, which had increased to 66% of GDP by mid-2020. While concessional lending had helped manage debt servicing costs, Pryce emphasized the importance of diversifying revenue sources and engaging the private sector to drive economic growth and mitigate debt risks. In conclusion, Rwanda faces a complex economic recovery path post-pandemic, with a focus on fiscal policy management, human capital development, employment stabilization, and debt sustainability. The World Bank continues to work closely with the Rwandan government to chart a sustainable and inclusive recovery course that addresses the country's short-term challenges and fosters long-term growth and resilience.