Fitch Revises Rwanda Outlook to Stable, Affirms B+ Rating
TLDR
- Fitch Ratings upgraded Rwanda’s long-term foreign-currency sovereign rating outlook to Stable from Negative, affirming it at B+, citing reduced uncertainty in external financing and fiscal stability.
- Government debt is expected to stabilize despite potential rise to 79% of GDP by 2027, with a mitigating factor being 89% owed to official lenders on concessional terms.
- The outlook balances improved macroeconomic stability against persistent external risks, emphasizing Rwanda's reliance on concessional financing for development amidst ongoing concerns about current account deficits and debt management.
Fitch Ratings revised the outlook on Rwanda’s long-term foreign-currency sovereign rating to Stable from Negative and affirmed the rating at B+.
The agency cited reduced uncertainty around external financing, supported by continued engagement with international partners and easing regional tensions. External disbursements reached about $1 billion in the fiscal year ending June 2025, helping to ease short-term fiscal and external pressures.
Fitch said government debt is expected to stabilise over the medium term, although it could rise to about 79% of GDP by 2027, above the median for countries in the B rating category. The structure of the debt remains a mitigating factor, with about 89% owed to official lenders on concessional terms.
The agency also expects fiscal consolidation to continue, with the budget deficit projected to narrow to 3.6% of GDP in 2026, supported by stronger tax revenues following recent reforms.
However, Rwanda is expected to maintain a large current account deficit, estimated at about 15% of GDP in 2026, driven in part by imports linked to major infrastructure projects such as Bugesera International Airport.
Points clés à retenir
The outlook revision reflects a balance between improving macroeconomic stability and persistent external vulnerabilities. Rwanda’s access to concessional financing from multilateral and bilateral partners remains a key support factor, allowing the government to fund development projects while managing borrowing costs. The high share of concessional debt reduces refinancing risks compared with countries relying more on commercial borrowing. At the same time, large current account deficits highlight Rwanda’s dependence on external funding to finance imports tied to infrastructure investment and economic expansion. Strong growth projections above 7% through 2027 indicate that the economy is expected to expand at a faster pace than many peers, supported by construction, agriculture and tourism. However, sustaining this trajectory will depend on maintaining external financing flows, stabilising foreign reserves and managing debt levels. For investors, the Stable outlook signals reduced near-term risk but does not remove structural concerns related to external balances and debt dynamics. Future rating movements will likely depend on Rwanda’s ability to narrow its current account deficit, maintain fiscal discipline and sustain growth without a significant increase in external vulnerabilities.
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