The country’s worsening trade deficit continued to widen further by 12.7 percent in the first two months of 2016, the Central Bank has announced.
The deficit jumped to U$ 297.02 million from U$ 263.55 million which the bank says was due to an increase of formal imports value that rose by 7.2 percent on account of a decline of 9.7 percent in value for exports.
“In these two months formal exports covered 20.6 percent of formal imports against 24.4 percent in the same period last year,” said John Rwangombwa, governor of the Central Bank.
The country’s imports continue to rise despite the efforts by government to cut down on the import bill and this has increased the demand for more dollars pushing francs towards depreciation.
According to central bank statistics released on Monday, the Rwanda francs continued to depreciate against the green backs since last year reaching 2.6 percent by mid-March thus exerting more pressure on the foreign exchange market.
But the ministry of Trade recently said there are plans to offset the high import bill through promoting local products, with hopes that most of the imported products could be consumed locally.
“Take an example of rice and cement which we import and yet we have the capacity to produce it locally,” said Emmanuel Hategeka, Permanent secretary in the ministry trade and industry on Tuesday.
Hategeka says that what is needed to reduce on the import bills is to sensitize Rwandans to consume local products but also support industries to increase its capacity and competitiveness.
Despite the efforts, experts say government will have to further look at increasing export earnings to bring down its Balance of Payment-BOP deficit expected to rise up to 81 percent by end of this year.