Govt focuses on reducing debt

Monday May 13 2019


The govt borrowed money in 2013 to finance big infrastructure projects like the Bugesera International Airport. Such projects are expected to boost the country’s economy. PHOTO | SEARCH 

More by this Author

The government wants to prioritise concessional loans, sustain its low level public debt status and avoid borrowing on international market before Eurobond matures.

In 2013, Rwanda borrowed to finance mega infrastructure projects such as the country’s landmark Kigali Convention Centre, RwandAir and Bugesera International Airport.

Officials have said the country is managing the debt prudently to service it and tame a growing trend while investing in projects that will increase the country’s production and bring in foreign currency.

“The problem is not even the level of debt, the problem will be if every year you are unable to service the debt,” saidd Leonard Rugwabiza, economic adviser in the Ministry of Finance and Economic Planning at a recent Policy Dialogue about Rwanda’s Debt Status.

Mr Rugwabiza who is also a board member of the Kigali Convention Centre said the hotel and conference complex started making a profit last year.

In March, the International Monetary Fund’s mission to Rwanda said that preliminary results of the debt sustainability analysis showed that the risk of the country’s debt remains low with a present value of debt to GDP reaching 32.9 per cent against a threshold of 50 per cent.


“The share of concession al loans in the total debt stock stood at 63 per cent as of the end of 2018 compared with a level of 57.4 per cent as of end 2017,” IMF noted in a statement.

“This is thanks to the country’s debt strategy to maximise concessional borrowing in favour of commercial borrowing,” the IMF noted added.

Stella Nteziryayo, director of the Debt Unit at the Ministry of Finance and Economic Planning, said the public debt is not worrying when one looks at its ratio per GDP, adding the country does not want debt accumulation.

”We want to emphasise on the fact that as long as the country is putting more effort in resource mobilisation, we are not going to borrow,” said Ms Nteziryayo

Data from the Ministry of Finance shows external debt stands at 38.5 of total debt while domestic debt stands at 10.9 and State Owned Enterprises and external Guarantees at 4.2 per GDP as of 2018.

Total external debt stands at $4 billion and in 2013, the government acquired a $400 million Eurobond loan to fast-track investments. The country committed to complete payment of its Eurobond loan by 2023.

Officials said there are two main options to repay the Eurobond namely debt refinancing and payment.

“We will advise the government in due course,” said Ms Amina Rwakunda, chief economist at the Ministry of Finance and Economic Planning.