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S&P revises Rwanda’s outlook to Positive; maintains rating at B

Posted on 11.08.2018

Standard and Poor’s (S&P), a corporate and sovereign rating agency has revised Rwanda’s outlook to positive from stable and maintained the rating at “B/B” for long and short-term.

The positive outlook reflects Rwanda's external adjustment policies whose objective is to reduce external financing needs and shore up foreign exchange. It is buoyed by Government balance of payment policies which are expected to deliver higher exports of nontraditional goods, including gemstones, textiles, and agro-processing, while reducing imports through increased domestic production of goods such as cement. 

In a statement released by the S&P on Friday, the rating agency said it would look to take a positive rating action if Rwanda’s economic performance is materially stronger than its projections and compared with peers.

The 2015-2016 balance-of-payments shocks forced Rwanda implemented external adjustment policies supported by an 18-month International Monetary Fund (IMF) standby credit facility (SCF) of $204 million. This has partly helped the current account deficit to decrease by more than half to around 7% of GDP in 2017, from almost 16% in 2016.

S&P forecast that the current account balance will gradually decline from 2019, notwithstanding the upcoming import-heavy projects, such as construction of the new Bugesera airport. It anticipates upcoming investment projects, higher exports and consumption will support stronger medium-term growth prospects. 

However, S&P long-term rating on Rwanda remains at 'B', reflecting low GDP per capita levels of less than $1,000 and the debt accumulation to fund infrastructure projects. The rating reflects their assessment that the government will keep net debt levels moderate at around 45% of GDP by 2021.

For more information about the rating visit https://www.standardandpoors.com/en_US/web/guest/article/-/view/sourceId/10659900 

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