The City of Kigali skyline. Rwanda’s credit rating by S&P maintained a stable outlook. File Photo.
Global ratings agency S&P has reaffirmed Rwanda’s sovereign credit rating at ‘B+’ long-term and ‘B’ short-term, maintaining a stable outlook, citing the country’s resilient economic growth, disciplined fiscal management, and continued access to concessional financing.
Ongoing geopolitical tensions in the region and rising external financing needs tied to strategic infrastructure projects will not affect Rwanda’s economic growth trajectory, according to the report released on May 16.
The affirmation reflects S&P’s confidence in Rwanda’s medium-term macroeconomic outlook, underpinned by strong GDP growth projections, a favorable debt profile, and the government’s commitment to reforms and fiscal consolidation, even as security and geopolitical concerns in the region—including renewed tensions with the Democratic Republic of Congo (DRC)—pose emerging risks.
Strong growth despite regional volatility
Rwanda’s real GDP is projected to grow by over 7% annually between 2025 and 2028, one of the highest growth rates among similarly rated sovereigns. According to S&P, the country’s consistent track record of reform implementation, infrastructure-led public investment, and policy predictability support this robust outlook.
In 2024, Rwanda posted impressive economic growth of 8.9%, up from 8.3% in 2023. This was largely driven by a favorable agricultural harvest and significant capital expenditure across key sectors, including roads, energy, health, and education. The momentum is expected to continue, even as the government embarks on major infrastructure investments such as the $2.6 billion Bugesera International Airport and the recapitalization of RwandAir.
Rwanda’s GDP per capita remains at an estimated $1,200 over 2025–2028, reflecting the government’s ambitious push to build capacity and transition toward a more diversified, service-led economy.
Bugesera Airport Project: A Long-term growth catalyst
A major focus of Rwanda’s investment strategy is the Bugesera International Airport, a transformative project expected to enhance logistics and air connectivity across Africa. The government plans to raise $1.2 billion between 2025 and 2028 for its contribution to the project, with the remainder financed through foreign direct investment (FDI), primarily from Qatar, which holds a 60% stake in the airport and recently acquired a 49% stake in RwandAir.
Once completed around 2028–2029, the new airport is expected to alleviate capacity constraints at Kigali International Airport, improve Rwanda’s position as a pan-African logistics hub, and stimulate job creation and tourism revenues.
While S&P acknowledges the fiscal pressure posed by the airport’s financing requirements, it also highlights the project’s long-term benefits and the government’s track record of managing large-scale investments through concessional and diversified funding mechanisms.
Concessional debt anchors fiscal stability
One of Rwanda’s key credit strengths, according to S&P, is its highly concessional debt structure. Approximately 88% of Rwanda’s external debt is concessional, contracted on long maturities with favorable interest rates. As a result, the country’s debt servicing costs remain modest, estimated at 10–11% of general government revenue, a significantly better position than many regional peers.
Despite rising public debt—expected to peak at 74.4% of GDP in 2026 due to prefunding for the airport—S&P projects a gradual decline to 69.5% by 2028, supported by strong economic growth, moderation in currency depreciation, and ongoing fiscal consolidation. Additionally, Rwanda’s only outstanding Eurobond, valued at $620 million, does not mature until 2031, further limiting near-term repayment risk.
Rwanda’s fiscal deficit is forecast to narrow from 6.9% of GDP in FY2024 to 4.0% by FY2028, driven by higher tax revenue from digitization and restructuring efforts, as well as restrained recurrent spending.
Cutting external funding won’t affect economy
Despite some bilateral donors announcing suspensions in project lending and budget support—largely due to the conflict in the DRC—S&P emphasizes that these suspensions amount to less than 1% of GDP annually. Importantly, multilateral development financing, which constitutes roughly 80% of Rwanda’s annual donor inflows, remains unaffected.
The government has also benefitted from strong support from the International Monetary Fund (IMF). Rwanda successfully completed a 36-month policy coordination instrument and a $319 million Resilience and Sustainability Facility (RSF) by December 2024—six months ahead of schedule. Additionally, a $262 million Stand-By Credit Facility approved in October 2023 is currently underway and is expected to transition into a new program in early 2026.
S&P underscores that Rwanda’s continued access to concessional and multilateral financing is pivotal to preserving macroeconomic stability. The country’s foreign exchange reserves increased from $1.9 billion in 2023 to $2.4 billion in 2024, with projections to average $2.8 billion over the next three years, ensuring sufficient buffer against external shocks.
DRC conflict remains a risk factor
The report states that the situation in eastern DRC remains volatile. The recent offensive by the M23 rebel group, which escalated in early 2025, has intensified political tensions between Rwanda and the DRC. Rwanda consistently says the solution lies in dialogue between the rebels and the government, to resolve longstanding issues leading to the conflict.
S&P notes that a prolonged or intensified conflict could undermine investor confidence, stifle growth, and limit access to concessional financing—though this is not their base case. A previous episode in 2012 led to a brief slowdown in donor flows and a drop in GDP growth to 4.8% in 2013. Efforts led by Qatar, the U.S and African-led process have given hope that soon a solution will be found.
Nonetheless, ongoing diplomatic efforts, including a U.S.-brokered peace deal expected by mid-May 2025, offer some optimism for a peaceful resolution and restoration of normal economic engagement.
Institutional strength and climate resilience
Rwanda continues to distinguish itself in the region through effective policymaking and long-term development planning. The government has pledged RWF 850 billion ($450 million) over the next four years to strengthen resilience in the agriculture sector and mitigate the impact of climate change.
In fact, Rwanda was the first African country to enter into an RSF with the IMF and has prioritized green infrastructure, agro-processing, and climate-focused budget transparency.
Despite some concerns over political centralization—President Paul Kagame was re-elected in July 2024 with 99% of the vote—S&P recognizes Rwanda’s institutional effectiveness and capacity to implement complex development programs.
Monetary policy and financial sector outlook
Inflation remains contained within the National Bank of Rwanda’s (BNR) target band of 5% ±3%, despite a modest uptick to 6.5% in March 2025 due to unseasonal rains impacting food prices. After tightening rates aggressively during the 2021–2023 period, the BNR cut rates twice in 2024, bringing the policy rate to 6.5%.
The banking sector, while still small with assets equal to 45% of GDP, is well-capitalized and increasingly active. Credit growth remains robust—up 18.4% in Q2 2024—and lending is concentrated in strategic sectors like construction, mortgages, and SOEs. Although nonperforming loans rose to 5.0%, this was attributed mainly to one underperforming power project.
Notably, the report says more efforts to boost financial inclusion are need, with digital financial services and mobile banking gaining momentum, offering promising avenues for expanding credit access and economic inclusion.
S&P’s stable outlook on Rwanda reflects balanced risks: strong economic fundamentals and concessional debt on one hand, and regional security concerns and external financing pressures on the other.
“We could raise our ratings on Rwanda over the next 12 months if the economy grows faster than forecast, the political situation stabilizes, and fiscal and balance-of-payments vulnerabilities ease,” the report stated.
Rwanda continues to impress with its development-focused governance model, resilience to shocks, and a forward-looking investment agenda.
