The disbursement will help the country, which has registered 84 coronavirus cases so far, to address the pandemic.
The emergency assistance is drawn under the Rapid Credit Facility (RCF), which provides rapid concessional financial assistance with limited conditionality to low-income countries.
“It will serve to meet Rwanda’s urgent balance of payment needs stemming from the outbreak,” the IMF said.
The economic impact of the COVID-19 pandemic has given rise to significant fiscal and external financing needs.
The authorities have acted fast by putting in place measures to help contain and mitigate the spread of the disease.
According to the IMF, the RCF funds will support the authorities’ efforts by backstopping the decline in international reserves and providing financing to the budget for increased spending.
All this is aimed at containing the epidemic and mitigating its economic impact.
This additional IMF financing also ought to help catalyse further assistance from the international community, preferably in the form of grants.
The IMF said its Executive Board had a discussion with Rwanda.
“The COVID-19 Pandemic has ground Rwanda’s economy to a halt, creating an urgent balance of payments need,” Tao Zhang, the IMF’s Deputy Managing Director and Acting Chair, said in a statement.
To contain and mitigate the spread of the virus, the government swiftly implemented measures that have affected all sectors of the economy.
With uncertainties surrounding the duration and spread of the pandemic, the economic fallout could intensify further.
The IMF said the emergency support under the will help with COVID19-related pressures on trade, tourism, and foreign exchange reserves.
It will also provide much-needed resources for health expenditure and for households and firms affected by the crisis.
“A temporary widening of the budget deficit is appropriate to mitigate the health and economic impact of the pandemic,” the IMF said.
The financial institution advised the country spending should be well-targeted and cost-effective to not crowd-out other priority areas.
“Once the crisis abates, the fiscal adjustment path should be adjusted to preserve debt sustainability in the medium-term,” the Fund said, adding that contingency plans should be prepared given the uncertain outlook.