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Rwanda Tipped On ExportsThursday, February 05, 2015 > 09:23:57
The has advised Rwanda to harness the potential of regional integration.
This is to support export diversification and help it overcome geographic constraints..
Legarde was stating the key policies that can accomplish Rwanda's vision for the future at a public lecture held in Kigali, on her recent three days visit to Rwanda.
"Rwanda's success has been impressive but to achieve its goal of a middle class status, its growth model will need to evolve which will help translate the country's current achievements into even stronger outlook," the IMF boss said.
Legarde said, "Rwanda needs to open up and reach out to its neighbours for export- oriented business to innovate and flourish".
"Export diversification hinges on successful access to market. For a landlocked economy like Rwanda, regional integration is a potent instrument to tap into bigger markets and new products," she said.
Legarde said, "Deeper integration in the East African Community would allow Rwanda to benefit from regional infrastructure projects in key areas including power generation and transportation which are steps critical in unlocking the country's growth potential.
The public lecture held in parliament was themed "Rwanda taking on the future staying ahead of curve". It brought together senior government officials, members of the civil society, heads of international organizations, diplomats, and parliamentarians among other. The public lecture focused mainly on how to achieve Rwanda's Vision 2020 and its Economic Development and Poverty Reduction Strategy 2 which are one of the country's goals in attaining a middle class status by 2020.
The IMF boss stressed the need to foster self- reliance which is another way to seeing Rwanda achieve its target of becoming a middle income country by 2020.
"To reduce reliance on aid, mobilizing domestic revenues will be critical in creating a fiscal space," Legarde said.
Rwanda's tax collection contributes 16% to GDP, still very low compared to her peers in Africa and in the EAC where it is at 25% as target.
The IMF has been heavily engaged with Rwanda in providing technical assistance and capacity building in revenue administration and collection.
"We will continue this support to broaden the tax base and strengthen administration so that Rwanda can bridge this gap," Legarde said.
Legarde said: "The infrastructure gaps that continue to hold back the private sector from flourishing in particular key infrastructure projects in transportation, water, and energy need to come on stream to unlock its full potential," the IMF boss said.
The fund has been engaged with the government in exploring optimal combinations of financing sources which has contributed to an increase in revenue and judicious resort to external borrowing to finance critical infrastructure projects. Rwanda has made important strides over the years such as cutting the red tape for construction permits, making it easier to get electricity and strengthening legal rights of borrowers and lenders.
According to World Bank Doing Business Report, the country is now in the top three sub-Saharan performers.
To promote the private sector more, Legarde said "There was need to create a skilled labor force to reap the dividends from demographic transition".
She commended Rwanda's homegrown interventions to make growth more inclusive and improve social services especially for women and the rural poor.
She said: "This clearly demonstrated a path towards an economy that aims to be a middles income country," she said.
Minister of Finance and Economic Planning Amb. Claver Gatete appreciated the IMF for the support it has been providing to Rwanda in her entire development process. "This support gives confidence to other development partners to come in knowing that the programme is solid since it has been working together with the IMF which is known for its credibility not only in Rwanda but also globally," the minister said.
IMF, is an organization of 188 countries, Rwanda inclusive, working to foster global monetary cooperation and stability, facilitate international trade, secure financial stability and promote employment and sustainable economic growth and reduce poverty.
Legarde is the first IMF Managing director to visit Rwanda which stands in the history of the country.