Fitch Ratings has affirmed Rwanda’s credit rating at ‘B+’ with a stable outlook, a decision that reflects both the potential and the challenges facing the country’s economy.
While the rating indicates some resilience, it also highlights critical areas of concern, particularly country’s low GDP per capita and ongoing budget and current account deficits, which have contributed to rising public and external debt levels.
Fitch’s analysis anticipates real GDP growth of 8.0% in 2024, tapering to an average of 6.7% from 2025 to 2026. This forecast is significantly higher than the ‘B’ median of 4.1%, largely due to substantial public sector investment and the anticipated economic stimulus from infrastructure projects, particularly the ongoing construction of Bugesera airport. Increased household consumption, driven by improved access to credit and a stronger labor market, is also expected to bolster economic activity. However, the recent outbreak of the Marburg virus adds a layer of uncertainty that could impact these optimistic projections.
On the inflation front, Rwanda has made notable progress, with consumer inflation averaging 4.9% during the first eight months of 2024, a marked decrease from 14.3% in 2023. Fitch forecasts a further decline to 4.5% in 2024, which is comfortably within the central bank’s ( BNR’s) target range of 2% to 8%. This downward trend can be attributed to previous monetary tightening and falling food prices, indicating a responsive and adaptive economic policy framework.
Fitch expects Rwanda’s fiscal deficit to narrow to 5.5% of GDP for the fiscal year 2024/2025. This reduction is primarily driven by a decrease in election-related expenditures and ongoing fiscal consolidation efforts supported by international partners, including the World Bank and the IMF.
However, the country’s debt levels are set to rise, with projections suggesting government debt will reach 75.6% of GDP in 2024 and 78.2% in 2025 Although this figure is well above the ‘B’ median of 52% for 2025, the highly concessional nature of Rwanda’s debt—characterized by a long maturity profile and low interest rates—mitigates immediate sustainability risks.
Additional, Fitch affirms the current account deficit is expected to widen to 12.5% of GDP in 2024, influenced by buoyant imports associated with economic activities, particularly in relation to the Bugesera airport project. Despite modest foreign direct investment inflows, Rwanda’s net external debt is projected to rise significantly, reaching 66.8% of GDP by 2026. Nevertheless, the country is set to benefit from robust external financing commitments estimated at approximately USD 1 billion annually through 2026, bolstering foreign reserves from a projected USD 1.9 billion in 2024 to USD 2.2 billion in 2026.
