Rwanda Central Bank Governor John Rwangombwa offers insights into the prospects and risks the economy faces in 2020 and trends in the banking industry.
Give us a picture of the country’s current economic situation?
Nothing much has changed on the ground vis-a-vis what we had expected to see. We do not have all the numbers yet but the new authorised loans are already slightly above what we had by the end of February last year, even though the numbers then and in 2018 were high.
The IMF has raised the red flag on the likely impact of the coronavirus pandemic. What instruments are you considering to shield the franc?
The pressure surrounding coronavirus may impact the economy on inflation but not necessarily on currency, because we don’t expect the import bill to shift faster than we have seen. The trade deficit has widened due to the heavy import bill vis-a-vis the exports.
Last year exports grew at 3.8 per cent and imports at 10.8 per cent. The good thing is that the main driver of imports is capital goods and they are building the base for the growth of the economy going forward.
In the medium term, say the next five years, big imports, mostly capital goods going to projects like the Bugesera airport and peat plant will support our productive capacity and the manufacturing sector which will improve our foreign exchange earnings. Therefore, the solution really is to make the right investments in order to improve our export base, which we are doing.
Conference tourism will be affected by coronavirus in the short term and even if the crisis prolongs, it is unlikely to extend beyond this year. The work that has been done to promote tourism will begin to improve our foreign exchange earnings.
In addition, the Qatar- RwandAir partnership will contribute towards conference tourism and travel, and Rwanda acting as the hub will help us earn more foreign exchange.
Commercial banks wrote off Rwf57 billion ($59.9 million) in bad loans. What measures have you put in place to curb non performing loans? First, written off does not mean “lost.” Loan write-off is normal and it is done to clean up the loan book.If an asset has reached class five as a bad loan, you are allowed to keep it on your books for one year. And if you are unable to recover it, you write it off and continue to […]