Rwanda: Stable Credit, Rising Confidence

Last week, Moody's Ratings revised Rwanda's credit outlook from negative to stable, suggesting a significant decrease in risks relat...

Last week, Moody's Ratings revised Rwanda's credit outlook from negative to stable, suggesting a significant decrease in risks related to the nation's ability to repay its debts. The international ratings agency also reaffirmed the country's B2 rating for both its local and foreign currency debt. This indicates a reduced probability of future downgrades, acknowledging the government's success in maintaining growth, securing international assistance, and overseeing substantial infrastructure projects. ALSO READ: Moody's upgrades Rwanda’s credit outlook to stable According to Yusuf Murangwa, the Minister of Finance and Economic Planning, Moody's decision validates the government's sound economic management and strategic reforms. He told The New Times that it "signals to the global investment community that Rwanda is a stable and attractive destination for capital," and further demonstrates the government's capability to manage risks. Reduced Risks Moody's noted that the revised outlook to stable reflects its assessment that the downside risks for Rwanda resulting from the conflict in eastern DR Congo have lessened. These tensions had previously raised concerns about Rwanda's access to international financing and foreign currency. ALSO READ: Rwanda-DR Congo: New deal for major economic partnerships in pipeline The peace agreement of June 2025, brokered through U.S.-led mediation and supported by international and regional partners, has considerably mitigated these risks. The finance ministry reports that all anticipated disbursements were successfully received by the end of the fiscal year 2024/25, and development partners are continuing to actively fund new projects. Concurrently, the tourism sector, a crucial source of foreign exchange, experienced a 6 per cent year-on-year growth in early 2025, despite regional tensions, according to World Travel & Tourism Council. ALSO READ: Rwanda-DR Congo: New deal for major economic partnerships in pipeline Investment to Stimulate Growth In its evaluation, Moody's pointed out that the government's substantial investment in the new Kigali International Airport and RwandAir presents fiscal and debt challenges, as the remaining investment exceeds 7 per cent of its gross domestic product (GDP). However, the ratings agency maintained that these risks are balanced by the recently approved multi-year tax package or tax reforms, which provides some fiscal flexibility, and the authorities' proven ability to effectively adjust fiscal policies and manage debt. Rwanda's economy has shown consistent growth, with a real gross domestic product (GDP) increase of 7.8 per cent in the second quarter of 2025, an increase from 6.5 per cent in the first quarter of 2025, according to the National Institute of Statistics Rwanda (NISR). The Ministry of Finance states that the new airport, scheduled to begin operations by 2028, will further accelerate this growth. The project aims to increase passenger capacity from 1.7 million to 7 million annually in its initial phase, with a second phase targeting 14 million passengers per year upon completion. This is expected to strengthen the country's position as a regional hub for tourism, trade, and logistics, attracting greater foreign investment and creating new business opportunities. To minimize costs, Rwanda is using a blended finance approach: approximately two-thirds of the airport's cost is being covered by the Qatar Investment Authority, while the remaining portion is financed through concessional loans, bilateral support, and private sector partnerships. “This investment is carefully sequenced as the fiscal deficit may temporarily rise to around 7.4 per cent of GDP in 2025/26 but is projected to fall below 5 per cent by 2026/27 as newly implemented taxes start generating revenue.” ALSO READ: Rwanda’s economy up by 7.8% in Q2 2025 as base year changes New Reforms Rwanda implemented new tax reforms in the first half of 2025, which are projected to increase revenues by 3 percentage points of GDP by 2029. According to the ministry, this will bring tax revenue close to 18 per cent of GDP. This is expected to expand fiscal space, allowing for strategic investments to drive growth while maintaining a sustainable debt path. Although debt may increase slightly during construction, it is projected to stabilize and gradually decrease after 2027–28. While these projects involve some short-term risk, they are designed to transform Rwanda into a regional hub for tourism, conferences, logistics, and trade. Moody's notes that, while the debt burden may temporarily increase, the long-term impact is positive, leading to higher growth, diversified exports, and greater economic resilience, the ministry stated. Murangwa stated that "De-risking our economy through transformative investments such as the new Kigali International Airport, financed through a smart blend of foreign investment and concessional funding, are calculated investments in our future growth, designed to establish Rwanda as a regional hub."

Provided courtesy of SyndiGate Media Inc.Syndigate.info).