Rwanda Scores B+ in S&P Global Rating but Remains Warned over Ebola Threat

According to S&P, Rwanda’s outlook is stable because the country is expected to continue to achieve above-average real GDP growth over the medium term

The outlook of Rwanda’s economic performance remains ‘stable’, a latest ranking by  Standard and Poor’s (S&P) Global says.

But Rwanda is also warned, that its economy could face downward pressures if measures against Ebola outbreak in the neighbouring Democratic Republic of Congo are not wisely allocated.

The two neighbouring countries have jointly tightened measures against killer Ebola – following several cases that were reported in DRC.

Rwanda remains Ebola – free, despite thousands of travellers crossing everyday through the border town of Rubavu in Rwanda and Goma in DRC.

The outbreak has been reported in DRC for the past two years, but recently shoot up – causing global attention.

At least more than 100,000 people, mostly involved in informal cross-border trade, use the border everyday.

Despite Rwanda’s closeness to its neighbour, the country’s economy remains unaffected.

For instance, in its rating, S&P, says that Rwanda’s long-term sovereign credit rating has been raised to ‘B+’ from ‘B’.

At the same time, the country’s short-term sovereign credit rating remains at ‘B’ with transfer and convertibility (T&C) assessment also moving to ‘B+’ from ‘B’.

For more than 150 years, Standard and Poor (S&P) Global Ratings provides high-quality market intelligence in the form of credit ratings, research, and leadership. It currently conducts its ratings in 28 countries around the world.

According to S&P, Rwanda’s outlook is stable because the country is expected to continue to achieve above-average real GDP growth over the medium term, balanced against risks of fiscal slippages and rising government debt.

However, Rwanda is warned that the current rate may be lowered over the next year, if the government’s investment program significantly increases external financing requirements and external debt above the current projections.

The country, S&P further warns, could also face a “downward pressure on the rating if higher fiscal deficits lead S&P to reassess Rwanda’s management and sustainability of public finances.”

Despite numerous shocks, International Monetary Fund (IMF) says that Rwanda’s macroeconomic management remains strong with low debt risks.

According to 2019 IMF and World Bank reports, debt sustainability measurement for Rwanda, currently stands at 31.9% – well below the 55% threshold for debt sustainability.

The country has set target to maintain  debt strategy at 39.8% in 2024, according to Ministry of Finance and Economic Planning.

In June this year,the Ministry said Rwanda’s economy grew by 8.4% in first Quarter of 2019 with GDP at current prices standing at Rwf2,144 billion.

However, in its latest rating, S&P says downward pressures could also emerge especially due to Ebola management which remains a threat.

“An additional downward trigger could be if the Ebola crisis currently in the Democratic Republic of Congo (DRC) significantly impacts Rwanda’s economy and exports.”

Business at Rwanda-DRC border remains ‘cautiously’ stable – despite killer Ebola outbreak across the border.

Rwanda has tightened measures against the outbreak from possible crossing of the busiest border.

Washing hands at the Rubavu border post, among the measures to prevent Ebola

The measures, officials say, are firstly taken to safeguard Rwandans, but keep the surging Informal trade with its neighbour (DRC), which accounted for 65.8% of the total informal cross border exports three years ago.

Rwanda, through Health Ministry, has reserved funds to contain Ebola in order to keep the percentage upward.

In June this year, it was reported that the government of Rwanda set aside Rwf11.5 billion for the fight against Ebola.

Meanwhile, Rwanda’s rating in the medium term could be raised “if the external outlook improves substantially, possibly as a result of government policies to diversify exports.”

The country could also see the rating further raised if income levels rise more rapidly the current projections.

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