Standard and Poor’s on Friday affirmed Rwanda at B/B; outlook positive. The positive outlook reflects S&P view that the upcoming pipeline of investment projects, along with higher exports and consumption, will drive strong medium-term growth prospects.
In a statement released on Friday, S&P noted that government policies to diversify exports and increase domestic production, along with a depreciating exchange rate, will support current account deficits decreasing to 9.5% of GDP on average over the next four years, from almost 16% in 2016.
“We could raise the ratings if Rwanda's economic growth materially outperforms
Peers’ with similar levels of economic wealth,” the statement read in part.
S&P could consider revising Rwanda’s outlook to stable if higher external financing requirements increase external debt beyond its current projections, or in case of higher fiscal deficits or materialization of contingent liabilities result in higher government
The ratings on Rwanda reflect low GDP per capita of less than $1,000, which is
one of the lowest among sovereigns that they rate, and the government's relatively high rate of debt accumulation since 2012 to fund infrastructure. The ratings reflect their assessment that the government will keep net debt levels moderate at about 48% of GDP by 2022.
S&P noted that debt held by state-owned enterprises (SOE) has rapidly increased over the past two years, and stood at about 6% of GDP at end-June 2018. If the pace of SOE debt accumulation continues, S&P could reassess contingent liability risks for the
government. It also expects that external debt net of liquid assets will remain
under 150% of current account receipts by 2022.