Rwanda had had its own currency and central bank for some years, and from 1974 it was fixed to the USD, in a limited financial system. After the immense disruption of the 1994 genocide, it moved over a long period towards a more modern monetary and financial system with flexible exchange rates and indirect monetary instruments, and a stronger commitment to price stability.
|Years||Targets and attainment||Classification|
|1974-93||currency pegged to USD, no autonomous forex market; limited banking system, with central bank sometimes funding fiscal deficits, lending to public enterprises, and using global credit ceilings, moral suasion and rediscount facilities vis-à-vis commercial banks; 1977-78 credit controls restructured, become main instrument; important but seasonal flows of coffee production have major effect on bank lending; one-off rise in interest rates late 1979; 1983 peg to SDR, with some depreciation vs USD, but most of overvaluation developed since 1980 not unwound; downward adjustment of interest rates 1987; late 1990 large devaluation, plus stabilisation policies and various structural reforms; 1990-3 armed conflict worsens existing economic difficulties; mid-1992 further devaluation||augmented exchange rate fix AERF|
|1994||1994 genocide followed by civil war and new government, with return of previous exiles, and displacement of new refugees internally and to neighbouring countries; acute adverse economic effects include loss of skilled personnel from key state and financial institutions (with severe but largely temporary disruption to statistics)||unstructured discretion UD|
|1995-2017||1995 rehabilitation of central bank and restructuring of commercial banks (which have large amounts of non-performing loans); replacement of old high denomination banknotes by new; programme of stabilisation and wider structural reform including increased use of reserve requirements and rediscount facilities, some liberalisation and wider variation of interest rates, market-determined exchange rate, and increase in autonomy of central bank; efforts to resettle returning old and new exiles; by 1997 economic rebound, with GDP up and inflation down; forex rationing and reluctance to allow depreciation leads to re-emergence of varying parallel market premium, largely eliminated by weekly forex auctions 2001; reserve money programming complicated by unstable money multiplier, reserve money targets often exceeded; by 2007 exchange rate is managed and stable; commercial bank weaknesses gradually reduced; more issues of and OMOs in bills, bonds and repos; monetary policy more proactive from 2010, but monetary transmission remains weak; exchange rate corridor as part of (sustained) move towards more flexible exchange rates; 2012 reserve money targeting made more flexible, standing facilities create corridor for repo policy rate; improvements in central bank expertise and communication; 2017 absorption of excess liquidity encourages use of interbank market, aim is transition to indirect and price-based monetary instruments with more focus on inflation; statistical database now improved||loosely structured discretion LSD|
Selected IMF references: RED 1972 pp25-8, 40-1; RED 1975 pp28-9, 41; RED 1977 pp31-2; RED 1978 pp29-31, 93-4; SR 1980 pp7-8; RED 1983 pp34; RED 1984 pp44-5, 57; SR 1984 pp10-11; RED 1985 pp42-5, 62; SR 1985 pp11-12; RED 1988 p9; SR 1989 pp13-15; SR 1991 pp7-9, 20; SEBP 1995 pp1-8, 19, 20; SR 1995 pp11, 14-15, 25; SISA 1996 pp5, 10-12; SR 1998 p13; SR 1999 pp10, 14; SR 2000 p8; SR 2002 pp17-18; SR 2007 pp13, 16-17; SR May 2008 pp7-8; SR December 2008 p24; SR 2010 pp15, 24-6; SR 2012 pp14-15, 52-3; SR 2014 pp18-19; SR 2017 pp9-10, 19-20, 59-60.