Another positive outcome has occurred in Rwanda as the growth of the country is revised from negative to stable. Standard & Poor Global Ratings, an international financial services company, revised Rwanda’s growth to stable from negative, citing the country’s ease of fiscal pressures and low debt servicing costs.
Rwanda’s improved fiscal performance and robust economic growth have eased its vulnerability to fiscal and debt risks, the international credit rating agency said in its latest assessment.
The outlook highlighted that despite the balance of payment remaining high, debt servicing costs are significantly below due to access to cheap, concessional external funding.
While there are signs of lessening, the firm said, Rwanda’s inflation remains high because Rwanda continues to record double-digit inflation rates.
Consequently, the assessment indicates that this could hinder the country’s transition to a more-substantial economic recovery.
It also affirmed Rwanda’s long- and short-term sovereign credit ratings on Rwanda at ‘B+/B’.
A sovereign credit rating is an independent assessment of a country’s creditworthiness. It is important because it gives investors insight into the level of risk associated with investing in the debt of a particular country, including any political risk.
The stable outlook, balances the risks posed by high inflation, global headwinds, and regional tensions, against the reduction in fiscal and external risks due to favorable domestic growth, improving public debt metrics, and continued access to low-cost, concessional financing.
According to the report, the rating may be lowered in the next 12 months if Government debt rises significantly above current expectations and available concessional financing is insufficient to cover it.
The rating could also sink if regional tensions escalate to a level that would hinder growth and weaken fiscal and external metrics.
However, S&P said, the rating may be raised if fiscal and external debt metrics improve significantly more than expected, underpinned by robust and sustainable economic growth combined with lower inflation.
Rwanda gets positive growth rating from the international community
