International Bank for Reconstruction and Development                                 86931
                         International Development Association
                            International Finance Corporation
                       Multilateral Investment Guarantee Agency
                                      FOR OFFICL\L USE ONLY

                                      CONFIDENTIAL
                                                                                                 EDS99-216
                                                                                               June 28, 1999
                                                                                                04:33:49 PM

  Statement by Godfrey Gaoseb
  Date ofMeeting: June 29, 1999


                       Rwanda: Country Assistance Strategy - Progress Report

           We welcome the discussion of this progress report for the first Country Assistance
  Strategy for the Republic of Rwanda. It is timely, and it also truly reflects the commitment of
  the Rwandese authorities to continue to undertake reform measures that would put their economy
  on the growth track. Notwithstanding the turbulent socio-political environment in which the
  economy has operated in the last several months, it is encouraging to note that the joint efforts of
  the Rwandese government and the international donor community have yielded positive results.
  The country has been able to maintain a stable macro-economic framework, and progress has
  been made in a number of areas, including the acceleration of the economic reform program, the
  holding of local elections to promote participation at all levels, and steps taken to enhance
  justice, political and economic governance, as well as national reconciliation.

           For the attainment of sustainable growth, more attention has to be given to a country's human
  resource base. This, in the case of Rwanda, will entia! a lot more than redirecting resources to education
  and human development. In our view, the starting point for this tall order, is resettling the large
  population of displaced persons. Another major challenge is combating HIVI AIDs prevalence with its
  debilitating impact on human resources with its negative consequences on economic growth. While
  progress has been made in resettling some of the displaced people over the last few years, the amount of
  work still to be done in the area of reintegration remains huge. Unfortunately, however, support from the
  donors for resettlement and reintegration appears to be declining. The revitalization of donor support for
  this purpose has therefore become the signlemost important challenge for Rwanda since inadequate
  support risks undermining national reconciliation and reform efforts, which is recipe for continued
  conflict in Rwanda in particular, and the Great Lakes sub-region in general.

           We have every reason to believe that the case for treating Rwanda as a special case remains more
  valid today than at any other time in the past. The Rawandese authorities have demonstrated their ability
  to engage their people for the promotion of peace and development. But experience elsewhere shows that
  conflict resolution could be elusive, if proper attention is not given to every aspect of the conflict. Hence,
  there is the need for continued special treatment to Rwanda with a view to giving serious consideration to

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every detail in the conflict. It is in this regard that we fully concur with the main thrust of the Bank's
assistance to Rwanda, which will concentrate on improving Jiving standards -- an important factor for
achieving sustainable peace and stability.

         We are pleased with the attention given to the revitalization of the rural economy, with the
provision of social and economic infrastructure required to improve living conditions, improve the
functioning of rural markets and raise productivity. This is consistent with the Bank's overarching
objective of poverty alleviation. In particular, rural and agricultural development is pivotal to poverty
alleviation and to boosting rural incomes in Rwanda where agriculture remains the mainstay ofthe
economy and provides employment to 92 percent of the active population.

         On the whole, we have no difficulty with supporting the proposed IDA assistance for FY00-01 as
stated in paragraph 43 of the document. However, we would urge that flexibility is exercised when
applying these triggers in view of the difficult socio-political climate currently prevailing in the country.

        Finally, we commend the staff for their efforts in preparing this frank and succinct progress
report. We also wish the Government of Rwanda every success in their efforts to put the development of
the country back on track.