The International Monetary Fund is to extend a standby credit facility to Rwanda but wants the government to tighten its economic policies to safeguard macro-economic stability and stimulate growth.

The amount Kigali has requested and when it is to be released, however, will be known in May after the board meets.

READ: Rwanda could go for IMF precautionary loan

IMF deputy division chief African Department Laure Redifer led the IMF mission to Kigali from March 22 to April 5 for the fifth review of the economic and financial programme supported by the IMF’s Policy Support Instrument (PSI).

The standby credit facility provides financial assistance to low-income countries with short-term balance of payment needs.

The IMF projects that the Rwandan economy will slow down from 6.9 per cent growth registered last year to 6 per cent for two years as a result of shocks in 2016/17 before picking in 2018.

These shocks are fuelled by a firming dollar which has resulted in the Rwandan franc depreciating, the falling export revenues and a ballooning import bill, putting pressure on external reserves.

“The strengthening of the US dollar against other currencies worldwide, coupled with the decline in international commodity prices that negatively affected the export revenues, has put pressure on the Rwanda franc,” a statement by the National Bank of Rwanda said.

The loan facility from the IMF is to be invested Rwanda import substitution drive as the country seeks to reduce the trade deficit gap by tapping into the regional market.

In 2015, Rwanda’s export revenues dropped sharply by 6.8 per cent to $558.8 million from $599.8 million in 2014 due to lower commodity prices mainly of mineral exports, which dropped by 42.1 per cent from $203 million to $117.8 million.

READ: Rwanda’s trade deficit widens, upsets earnings

Analysts are optimistic that the loan will reduce the country’s exposure to financial turbulence as well as the economy’s vulnerability to shocks from the current global slowdown.

Though the foreign reserves can cover four months imports, analysts fear Rwanda’s untamed “appetite” for imports, and the fact that imports are large while earnings are less remains a threat which might result into the reserves getting used up.