S&P Global, a leading global rating agency, has maintained Rwanda’s creditworthiness at B+ with a stable economic outlook following a recent assessment. The rating agency’s decision is underpinned by Rwanda’s anticipated robust economic growth, ongoing governmental initiatives to boost domestic revenue generation, and prudent expenditure management.
According to S&P Global, the stable outlook reflects a careful consideration of Rwanda’s vulnerability to balance-of-payments challenges and regional security threats, compared with the country’s diminishing fiscal deficits, sustained growth trajectory, and continued access to cost-effective, concessional funding.
In a statement released on Friday, July 26, 2024, S&P Global highlighted Rwanda’s advantageous debt structure, consisting of concessional loans with extended repayment periods. This structure has resulted in significantly lower debt servicing costs compared to countries with similar credit ratings, with projected interest expenditure averaging 9.1% of government revenue from 2024 to 2027.
Looking ahead, S&P Global forecasts that Rwanda will outperform its peers in terms of economic growth over the next five years, driven by substantial public investments. In 2023, the economy expanded by 8.2%, with year-on-year growth accelerating to 10% in the fourth quarter of 2023 and maintaining a similar pace in the first quarter of 2024. While agricultural output experienced sluggish growth in 2022 and early 2023, favorable weather conditions are expected to normalize production. Additionally, sustained growth in the services sector is set to catalyze increased private sector engagement from its current levels.
Despite these positive indicators, S&P Global acknowledges Rwanda’s susceptibility to climate change and weather-related disruptions, citing significant damage caused by floods in 2023. The rating agency commended the government’s swift response through the implementation of infrastructure rehabilitation projects and enhanced preparedness measures to mitigate potential future shocks over the coming four years.
S&P Global’s reaffirmation of Rwanda’s credit rating underscores the country’s proactive economic policies, strong growth prospects, and resilience in the face of challenges, positioning Rwanda favorably for continued economic stability and progress.
