Standard and Poor’s Maintains Rwanda’s Rating at B+; Outlook Stable

Posted on 10.02.2020

Standard and Poors (S&P), a global credit rating agency maintained Rwanda’s Sovereign Rating at B+, outlook stable.

According to a statement released on Friday, February 7, 2020, S&P stated that the ratings on Rwanda are supported by above-average growth trends compared with peers, which are underpinned by the government's track record of delivering inclusive growth through state-financed projects and broader macroeconomic initiatives.

S&P forecast continued high real GDP growth primarily driven by public investment, pointing out that it would likely result in higher fiscal deficits and rising government debt levels. However, the rating agency noted that a large portion of the higher fiscal deficits will be funded through concessional sources with long maturities, keeping funding costs low.

“We have revised our 2019 real GDP growth estimate upward to 9.5%, from 7.5% previously, on the back of stronger outcomes during the first three quarters of 2019. The key growth spurs included a ramp-up in construction projects and strong performance in manufacturing and services, with the latter supported by RwandAir and trade,” The statement read in part.

S&P forecasts real GDP growth of 7.7% annually over 2020-2023, citing a strong pipeline of construction projects including roads, energy projects, stadiums, schools, health centers and private residential and commercial real estate as factors to support Rwanda's growth prospects.

It noted that the construction projects will likely boost manufacturing activity, particularly for construction materials and metals. It also expects growth in agriculture and related industries to be supported by investment to boost the sector's resilience to adverse weather-related shocks, as well as a focus on increasing the value added from the sector through agro-processing, washed coffee, specialty teas, and horticulture exports.
“Government efforts to formalize the mining sector should, in the medium term, increase productivity and processing of traditional minerals (tin, tungsten, and tantalum) and nontraditional minerals, such as gemstones,” S&P added.

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