Investing.com -- S&P Global Ratings has affirmed its ’B+’ long-term and ’B’ short-term sovereign credit ratings on Rwanda, maintaining a stable outlook. The ratings agency cited Rwanda’s strong per capita GDP growth, highly concessional debt stock, and effective institutional framework as positive factors supporting the ratings. However, regional security risks, fiscal imbalances, and higher external financing needs related to the Bugesera airport project could pose challenges.
Despite heightened regional security risks and a partial suspension of donor funding, S&P Global Ratings expects that Rwanda will continue to access concessional financing. This would enable the country to carry out public investments that enhance growth and maintain macroeconomic stability.
Rwanda’s stable outlook is also balanced against its fiscal and external imbalances. The ratings could be lowered over the next 12 months if Rwanda’s access to concessional financing is significantly impaired or if regional security tensions escalate. Both scenarios could negatively impact Rwanda’s growth, budgetary, and balance-of-payments performances.
On the other hand, ratings could be raised if the economy grows faster than forecasted, political tensions ease, and fiscal and balance-of-payments vulnerabilities decrease.
Rwanda’s ratings are supported by the country’s effective institutional framework, favorable debt structure, and strong per capita growth rates. The country’s debt stock remains predominantly concessional, accounting for 88% of total external debt. Real GDP is projected to grow by more than 7% on average over 2025-2028, driven by government policies focused on improving infrastructure and addressing climate change.
However, the ratings are constrained by regional security risks, high balance-of-payments vulnerabilities, and the country’s sensitivity to adverse exchange-rate movements. This includes persistent current account deficits of over 10% of GDP, reflecting the high level of capital imports required to support Rwanda’s state-led infrastructure projects.
Despite strong reform commitments, policy responses are more difficult to predict because decision-making remains highly centralized. Relations between the Democratic Republic of Congo (DRC) and Rwanda have been fraught for decades, with sporadic outbreaks presenting risks to concessional financing access.
The IMF has continued to support Rwanda’s policy efforts. In December 2022, the IMF board approved a 36-month policy coordination instrument and a $319 million resilience and sustainability facility (RSF), both completed six months ahead of schedule in December 2024. A new unfunded program is expected to be signed in early 2026 upon completion of the stand-by credit facility (SCF) in December 2025.
Rwanda’s vulnerabilities have persisted due to its constrained balance-of-payments and fiscal positions. However, strong access to concessional financing is one of Rwanda’s key rating strengths. Concessional debt accounts for two-thirds of general government debt and underpins Rwanda’s lower debt servicing costs compared with similarly rated peers.
Rwanda’s general government debt, after deducting liquid assets, is expected to peak at 74.4% in 2026, before moderating to 69.5% in 2028. Domestic tax revenue mobilization measures are expected to help rebuild fiscal buffers, boosting revenue by 0.2% of GDP annually.
Rwanda’s external vulnerabilities will remain elevated due to its heavy reliance on imported finished goods. Import requirements for the Bugesera airport project are expected to add an estimated 2 percentage points annually to the current account deficit. However, these pressures could moderate after 2028-2029, when the Bugesera airport project is scheduled to be completed.
Inflation has remained within the National Bank of Rwanda’s (BNR) target band of 5%, plus or minus 3%, since December 2023. The BNR is expected to remain cautious about cutting rates further given anticipated supply shocks from the agricultural sector.
Rwanda’s banking system is growing from a small total asset base of 45% of GDP. The financial sector comprises three domestic banks and five subsidiaries of banks that primarily operate elsewhere in Africa. Banks are sufficiently capitalized and have robust liquidity.
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