Support for Macroeconomic and Investment Policies

Project description

Title: Macroeconomic and Investment Policies
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Rwanda
Lead executive agency: Ministry of Finance and Economic Planning
Overall term: 2018 to 2021


Almost two-fifths of Rwandans live below the national poverty line of 0.7 US dollars per day, making poverty reduction a vital objective. In its National Strategy for Transformation, the VISION 2020 and its successor VISION 2050, the Government of Rwanda sets out its long-term development objectives: eliminating poverty, and becoming an upper middle-income country by 2035 and a high-income country by 2050. The vision of the Government is to achieve this through high savings and investment and structural transformation to a knowledge-based economy. Sound macroeconomic and fiscal policies are key for inclusive growth, while design and steering of adequate public and public-private investment levels are crucial for providing the infrastructure enabling high productivity growth and structural economic change.


In Rwanda, the capacities of key government and academic actors for formulating economic and investment policies geared toward inclusive growth are strengthened.


Macroeconomic Analysis (Support Area 1) focuses on strengthening capacity for developing and using tools for macroeconomic projections and policy impact assessments, while supporting empirical research, which is feeding into policymaking in the Ministry of Finance and Economic Planning (MINECOFIN). The new phase of the programme builds on the integrated macroeconomic framework and database, developed in the first phase, and is since then maintained by the staffs of the Chief Economist Department (CED) and the National Bank of Rwanda (NBR). The programme aims at enhancing the macroeconomic toolbox by linking the macro framework to a short-term business cycle analysis (macro-econometric model), medium-term employment-income distribution (Social Accounting Matrix and Computable General Equilibrium model), and growth, investment, debt and population dynamics (long-term growth model).

Investment Planning (Support Area 2) focuses on strengthening capacity for investment planning and monitoring in the National Development Planning and Research (NDPR) department and sector ministries, while ensuring joint assessment of investment proposals, in line with the 2017 National Investment Policy. At the institutional level, investment appraisal processes are strengthened through guidelines for feasibility studies (using transparent financial and socio-economic criteria); investment monitoring is strengthened through enhanced Monitoring and Evaluation procedures; and investment budgeting, execution, and monitoring are integrated in MINECOFIN’s budget execution system. At the individual skill level, the programme supports training in investment appraisal, financial analysis, and Monitoring and Evaluation for NDPR and sector ministry staffs, covering both public and public-private partnership investments.

Economic Research and Networking (Support Area 3) focuses on enhancing economic research and public policy dialogue in three ways. First, it supports and cooperates with the Economic Policy Research Network Rwanda (EPRN), which aims at strengthening economic research by connecting institutions and individual researchers. Second, the programme supports the University of Rwanda (UR) in establishing a Master’s programme in “Applied Quantitative Economics”, starting in 2019/20, leading up to a PhD programme in due course, through a twinning arrangement with European universities and research institutes. As an intermediate step, the programme provided an eight-month MSc-level bridge programme in “Applied Quantitative Economics for PhD” (AQEPD) as preparation for accessing reputable PhD programmes elsewhere. Third, it supports the Institute of Policy Analysis and Research-Rwanda (IPAR) in establishing itself as a leading economic research provider in Rwanda.


In Macroeconomic Analysis, the integrated macroeconomic framework is operational, used by about 12 members of staff of CED and NBR, notably for projections, policy scenarios and Budget preparation. The MINECOFIN Young Economist Programme provides courses in economics and on-the-job training to about 15 economics graduates each year, preparing for work in MINECOFIN or other government institutions.

In Investment Planning, the National Investment Policy is being implemented and the transparency of investment decisions and the efficiency of public investment have improved. The newly developed project database is operational, capturing all ongoing, approved and newly proposed projects.

In Economic Research and Networking, EPRN has organised an annual research conference, 10 public lectures/policy dialogues, and eight research-oriented training courses each year. Two master-level AQEPD bridge programmes were delivered by a consortium of German universities and the UR, in 2016/17 and 2018/19.