The National Bank of Rwanda has slashed its lending rate to 4.5 per cent from five per cent, to stimulate economic growth amid the coronavirus pandemic that has halted economic activity.
This decision, along with other implemented policy measures taken in March, will support commercial banks to continue financing the economy, a statement from the central bank reads.
"The Monetary Policy Committee assessed recent negative economic developments, the unfolding impact of previous policy measures and the outlook of the economy. Considering that inflation is projected to decelerate in the second half of 2020, owing to a drop in aggregate demand, the committee decided to cut the central bank rate," the bank said on Thursday.
"The central bank also eased prudential requirements to exceptionally allow banks to restructure outstanding loans of borrowers facing temporary cash flow challenges arising from the Covid-19 pandemic.
By April 10, commercial banks had restructured loans worth Rwf255 billion ($272 million).
A reduction in the reserve requirement in March released Rwf23.4 billion ($25 million) at the start of April, the central bank said, while a credit cushion of up to Rwf50 billion ($53 million) is available for lenders during the coronavirus lockdown.
The government projects economic growth to fall to 3.5 per cent this year, down from the 10 per cent that the IMF had predicted Rwanda to grow by.
President Paul Kagame on Monday said that the government was engaged in talks with international lenders to postpone debt repayment for two years in order for the country to reinvest and stir economic growth.
Rwanda is also among 11 countries that will receive debt relief of $11 million from the IMF.