Using the model by Buffie et al. (2012), the Rwanda team studied the challenge of scaling up public investment and the associated resource requirements. Model simulations showed that scaled-up investment could provide a boost to growth, but mobilizing the required resources for the scaling up would be challenging because of unfeasible fiscal and private sector adjustments. Simulations that incorporated a combination of increases in tax revenue, expenditure rationalization, and judicious resort to external borrowing were the most realistic in terms of implementation. The simulations also demonstrated the importance of relying, to the extent possible, on concessional loans, and of the efficiency of the public investment process (see Box 3 of the report).
Anon. Rwanda: Staff Report for the 2012 Article IV Consultation, Fifth Review Under the Policy Support Instrument, and Request for Modification of Assessment Criteria. International Monetary Fund, Washington, D.C., USA (2013) 101 pp. [IMF Country Report No. 13/77]