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Cablegate: Rwanda Monthly Economic Review

VZCZCXYZ0007
RR RUEHWEB

DE RUEHLGB #0546/01 1581533
ZNR UUUUU ZZH
R 071533Z JUN 07
FM AMEMBASSY KIGALI
TO RUEHC/SECSTATE WASHDC 4270
INFO RUEHNR/AMEMBASSY NAIROBI 0888
RUEHDR/AMEMBASSY DAR ES SALAAM 0883
RUEHJB/AMEMBASSY BUJUMBURA 0074
RUEHKM/AMEMBASSY KAMPALA 1616
RUEHFR/AMEMBASSY PARIS 0244
RUEHKI/AMEMBASSY KINSHASA 0223
RUEHDS/AMEMBASSY ADDIS ABABA 0112

UNCLAS KIGALI 000546

SIPDIS

SIPDIS

ADDIS FOR LISA BRODY
DEPARTMENT FOR AF/C
DEPARTMENT PASS USTDA: UISZLER
DEPARTMENT PASS USTR: WJACKSON
DEPARTMENT PASS COMMERCE: RTELCHIN
DEPARTMENT PASS OPIC: BCAMERON

E.O. 12958: N/A
TAGS: EFIN ECON PGOV EINV ENRG ETRD EPET BTIO RW
SUBJECT: RWANDA MONTHLY ECONOMIC REVIEW

DEVELOPMENT PROJECTS / ISSUES

1. The Global Fund has pledged USD 59 million over the next five
years to fight HIV/AIDS. The project will emphasize prevention,
expanded access to anti-retroviral treatment, improved care, support
of orphans and people living with AIDS, and improved linkage between
tuberculosis and HIV services.
2. Sweden has increased annual aid to Rwanda by 28 to USD 30
million. 70 of the aid will go into direct budget support while the
rest will be used to support the Nile Basin Initiative.
3. The U.S.-based NGO, Compassion International, shifted its
regional office from Nairobi to Kigali. The Vice President for the
Africa region, Mr. Laurent Mbanda, explained that Kigali is a very
secure and clean city and that the GOR goes out of its way to
welcome NGOs and investors.

4. The Italian Cooperation, through the United Nations Development
Program (UNDP), plans to provide a grant of USD 767,000 to the
agri-business sector in Rwanda. The grant will go towards
rehabilitating a rice factory, purchasing rice processing machines,
rehabilitation of marshlands, factory generators, drilling water
bore holes, and purchasing storage cocoons.

5. A delegation from the Cologne Business School in Germany met
with President Kagame to commit support in the development of the
Rwandan tourism industry. The school intends to open vocational
training institutions in Rwanda.

6. The European Union approved USD 45 million for the
rehabilitation of 64 km road between the towns of Gisenyi and
Ruhengeri. The project is part of a global financing package of USD
56 million which has three components including road construction,
supervision of works, and institutional support for the Ministry of
Infrastructure. The road construction will be carried out by a
German company, STRABAG, while supervision will be ensured by a
British firm, TR Engineering. Construction is scheduled to begin
start July 1, 2007 and be completed by October 31, 2009.


COMMERCIAL OPPORTUNITIES / SUCCESSES

7. Elegant Africa, a British tourism company, will open a 6.2
hectare eco-tourism camp in the town of Musanze near the Virungus
National Park. Mr. Marcell Claassen, director of the USD 1.3
million project, reported that the Ikoro Tented Camp will have a 70
seat restaurant, lounge bar, and tent camp ground.

8. President Paul Kagame hosted a delegation from the U.S.-based
Burlington Northern Santa Fe (BNSF) Railway Corporation, to discuss
the construction of a railway connecting Rwanda to Tanzania's dry
port of Isaka. While the American firm does not currently express
interest in bidding on the project directly, it has offered to
provide the GOR assistance and oversight of the project.

9. Silverback, a Rwandan cargo airliner will soon begin regular
direct flights from Kigali International Airport to Dubai, Shanghai,
Lagos, Entebbe, Bujumbura, Kinshasa and Eldoret. This development
comes at a time when Rwanda is positioning to be a regional cargo
clearing centre and airline hub. It also signals confidence in
increased Rwandan imports and exports, and brings more competition
into a field dominated by SN Brussels.

10. The 4th international investment conference took place on May
28 and 29, attracting approximately 100 potential foreign investors.
President Kagame and former Tanzanian President Benjamin Mkapa,
current co-chairman of the Investment Climate Facility (IFC), opened
the conference and signed an agreement to launch the Rwandan
Investment Climate Project. The three year project USD 9 million
project will address major legal and regulatory constraints through
three inter-related components: commercial dispute resolution,
business registration reform, land registration reform. The
majority of the foreign investors attending the conference were
Rwandans living overseas making exploratory visits to the country.
Break-out sessions addressed opportunities and challenges in each of
the sectors, and the Minister of Energy announced new pending
regulations that will provide special incentives for investors in
solar energy equipment.

MACROECONOMIC INDICATORS

11. The Ministry of Finance published, in May, macroeconomic
summaries for the first quarter of 2007.

GDP Growth: 6.5
Inflation: 10.2
Core Inflation (net of food and energy prices): 5
Export Growth: 56.6
Import Growth: 31.1 (Note: overall trade balance remains at a 25
deficit)

12. The Rwandan franc appreciated 1% to 547 against the U.S.
dollar.

13. Revenue collections by the Rwanda Revenue Authority have been
strong, representing a 26% increase compared to the same period last
year.

14. Government expenditures and net lending increased 81% from the
same period last year. In fact, the GOR registered a 38 % budget
deficit in the first quarter of fiscal year 2007, spending an
additional USD 54 million than initially budgeted. Minister of
Finance, James Musoni, explained that delayed donors grant
disbursement and delayed parliament ratification action contributed
to the deficit. Specifically, the GOR expected USD 100 million from
donors while only USD 44 million was realized. In addition, the
Parliament delayed ratification of a World Bank grant of USD 51
million.


ARIETTI

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