Rwanda's economy will grow more than the earlier projection of 7.7 per cent this year, helped by increase in credit to private sector and financial sector stability, according to central bank's latest assessment of the economy.
The central bank's bullish assessment on the economic outlook also suggests that authorised loans as of September this year peaked at Rwf367 billion compared to Rwf339 billions approved last year.
The revelations were made yesterday during the bank's financial stability committee meeting aimed to assess stability of the country's financial system.
"As a result, financial institutions are well capitalised, highly liquid and profitable with satisfactory asset quality," said Amb.Claver Gatete in a press briefing.
The banks are health and with enough liquidity, he said, adding that their consolidated profit after tax was Rwf26.3 billion between January and September this year compared to Rwf22.8 billion that was registered last year.
Economy expanded by 9.9 per cent in the months running through April to June compared to 6.1 per cent in the same period last year.
Activity among Rwanda's tourism, banking, telecommunications and transport industries accelerated the country's economic growth.
"Growth is expected to be above 7.7 in 2012 with the performance in the financial sector and other sectors of the economy expected to improve," Central Bank Governor said.
Mid this year, appetite for credit was high standing at Rwf642 billion between January and August compared to 483.8 billion in the same period last year, central bank data indicates.
Information from Bank Populaire indicates that the bank surpassed its loans growth projections by Rwf17 billion representing an increase of 15.4 per cent from the initial projection. Reasons attributed to increase in credit to private sector were confidence in the economy and recovery of global economic situation.
"We expect credit approved to private sector will create a big positive impact in the economy," said Gatete.
The committee looks into performances of the sector, different companies vis avis international standards and advises on where there may be risks.
"We look at the trend, how the system or companies can handle shocks with out distablising entire system to test resilience," Gatete clarified.
A team of 11 people conducts quarterly macro-prudential assessment and stress testing in the banking sector, identify, monitor and publish associated risks.
The committee will look into the institution's governance, rules and regulations in place, international standards for the entire sector and the prevailing gaps.
However, the team indicated a need to continue regulatory reforms in pension, insurance and Microfinance institutions in order to cater for new market development and changes in global economic environment.