The New Times (Kigali)
23 September 2008
Posted to the web 23 September 2008
Rwanda has not yet suffered from the ongoing global market crisis but its effects could start being felt in the country in a few months if the situation persists, Rwandan economists have warned.
Global markets have been hit after the collapse of the United States (US) fourth largest bank Lehman Brothers and the country's mortgage system crisis.
The effects are being felt in the western world, especially in the US and in the United Kingdom. Speculation is high on whether the developing world is next to feel the crunch from the situation's contagion effects.
The US government has announced a $ 700 billion bailout to US financial institutions.
"For sure it is a crucial problem that is even being discussed on the International Monetary Fund (IMF) level but there are no immediate effects in Rwanda so far," said the Governor of Rwanda's Central Bank, François Kanimba, yesterday in an interview with The New Times.
The Governor said that he had just been attending a meeting about the issue with IMF agents in the country. He explained that there were no immediate effects of the current market collapse in the US envisaged by the IMF in developing countries so far.
But lack of immediate effects in the country doesn't mean that there was nothing to fear about banks in big economies collapsing. Kanimba said that Rwanda's capital market and exchange rates could be affected if the global market situation remained the same.
According to Professor Gérard Rutazibwa, a senior economics lecturer at the National University of Rwanda (NUR),the country could feel consequences of the global market situation in a few months if it continued. He said that things like reduction of some foreign investments and aid to the country were a sure deal.
"Every important global economic event must have worldwide repercussions," he said, explaining that foreign interventions in the country can be reduced by a situation like that in the US at the moment.
"You need to wait for some months to feel the effects," Prof. Rutazibwa said, speculating that the US aid pledges for next year were going to reduce as a result of its market collapses.
With the US government taking measures to save its financial market situation by investing hundreds of billions of dollars to buy off banks' bad debts, Kanimba thinks the move is going to save the situation and stop some of the current speculations.
"The US government has taken the affair in its hands," the Central Bank Governor said without giving room for speculation.
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