Rwanda expects credit to the private sector to grow by 20 percent in this year and inflation to rise moderately as low food prices cushion the effects of high oil prices, the central bank said on Monday. National Bank of Rwanda Governor Claver Gatete told Reuters that between December and April, credit to the private sector rose by 7.4 percent, and this figure is expected to jump by the close of the year.
"We project an increase of credit to the private sector by 20 percent for the whole year 2011," he said. The finance ministry said in early May rising food and fuel prices were expected to push Rwanda's inflation rate to 7.5 percent by the end of 2011, and it expected economic growth to slow to 7 percent in 2011 due to the impact of the higher prices. Rwanda's inflation rate rose to 4.98 percent in April from 4.11 percent a month earlier. Gatete said he expects inflation to hit 5.7 percent in June. Rwanda has a relatively lower inflation rate in the region. Nearby Kenya and Uganda have rates running in the double digits. "Despite the rise, Rwanda is experiencing low inflation as compared to other East African countries. This is due to good performance in agriculture, limited growth of monetary aggregates, a stable exchange rate and good co-ordination between monetary and fiscal policies," Gatete said.
"Inflation is likely to continue rising since surveys indicate that international oil prices would increase by more than 20 percent in 2011. This is expected to exert inflation pressure in Rwanda through the increase of oil prices in the domestic market."
Central bank data shows Rwanda's exports between January and April grew by 48.5 percent growth to $478 million from $432 million in the same period a year ago, helped by high commodity prices. "If you look at the prices of coffee, tea, cassiterite, coltan and wolfram on the international market, there was an increase and since these are our traditional exports we benefited from the good prices," Gatete said.