S&P Says Rwanda ‘B/B’ Ratings Affirmed Outlook Stable‍

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Global Credit Ratings has affirmed its ‘B/B’ long- and short-term foreign and local currency sovereign credit ratings on the Republic of Rwanda. The outlook is stable.

According to the rating company Rwanda’s moderate pace of real economic growth in the near term due to structural and transitory factors, while current account deficits remain structurally high as the reasons for affirming B/B ratings on Rwanda.

However, S&P projects medium-term growth prospects remaining strong, government debt and its servicing remaining moderate relative to peers, while monetary flexibility is improving.

S&P indicates that stable outlook balances the strong growth prospects and moderate debt burden against the risks of weak external metrics over the next 12 months.

It could lower the ratings if, in contrast to its present expectations, Rwanda’s current account deficits do not narrow, leading to a sustained additional external debt accumulation or a decline in net foreign exchange reserves.

S&P could raise the ratings if Rwanda’s growth or fiscal performance were to materially exceed its baseline forecasts (GDP growth of 6% and, reduction in the fiscal deficit and improvement in domestic revenues).

According to the 10th edition of World Bank Rwanda Economic Update Rwanda’s economic growth has been slowing down since mid-2016 resulting in a 6 percent growth in 2016 and in 4.2 percent annualized growth in the first quarter of 2017. This slowdown was mainly due to a combination of the drought, weak export prices and construction activities following the completion of large investment projects in 2016. However, the growth is expected to peak up in the second half of 2017.

The report also noted improvement in macroeconomic policy environment in 2017 with inflation decelerating to below 5 percent by June 2017 down from the peak of more than 8 percent recorded in February.




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