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Fitch Affirms Rwanda at ‘B+’; Outlook Stable

Posted on 16.05.2018

Fitch Ratings on Friday May 4, 2018 affirmed Rwanda’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B+’ with a Stable Outlook. 

Fitch’s review committee said; “The ‘B+’ rating reflects Rwanda’s strong governance and doing business metrics, low public debt/GDP and high growth potential. The rating is weighed down by its low income per capita, persistent and large current account deficits”. 

Fitch highlighted the strong governance and doing business metrics, low public debt/GDP and high growth potential and the Political stability and effective governance as key positive rating drivers. But the rating is weighed down by our low income per capita and large current account deficits although external pressures eased in 2017 to result in the current account deficit more than halving to 6.8% of GDP in 2017 from a historical high of 14.3% of GDP in 2016 but forecasts to widen slightly in the medium term, due to Bugesera airport construction driving up capital imports.  They said that risks to the rating for Rwanda are related to the need to attract long-term equity capital to finance the large current account deficit so it does not result in a depletion of foreign exchange reserves or rising net external debt.

The main factors that could individually or collectively lead to a positive rating for Rwanda are 

; continued strong GDP growth supporting income convergence towards ‘B’ rated peers and marked and sustained narrowing of the current account deficit.

Main assumption by Fitch on the outlook

Fitch assumes Rwanda will continue to implement structural reforms and prudent economic policies with support from the IMF under successor programmes, and assumes that the government will be able to maintain broad social and political stability.

For more information visit https://www.fitchratings.com/site/pr/10029256  

Note: A rating expresses the belief that in the short to medium term, a country is capable of settling/servicing its debt without any problem. This belief has based on an assessment of the economic situation as well as the policies of the Government. This tell investors that the risk of investing in the country is low - as they are sure to get back their investment. A good rating usually translates in lower cost of financing (on commercial debt) and, at the same time, when combined to other reforms, means being an attracting destination for investors.

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