News Column

Rwanda GDP Pegged At 6.5 Percent

August 4, 2014

Fitch expects real GDP growth of Rwanda to be 6.5% increasing to 7% and 8% in the medium term of 2014.

The credit rating firm said this is going to be supported by the stronger regional integration within the East African Community and gains from agriculture, mines, tourism and service sectors of the country.

According to World Bank, this is again going to be supported by the good business environment the country has which makes it the second best in Africa next to Mauritius.

With such development, Fitch has upgraded Rwanda's long term foreign and local currency Issuer Default Ratings (IDR's) to B+ with a stable outlook, and again upgraded the country's senior unsecured foreign and local currency bonds to B+. Fitch says the long- term IDR's is stable while the country's ceiling is upgraded to 'B+' and the short- term foreign currency IDR is affirmed at 'B'.

Rwanda joins three other Sub-Saharan African countries with Fitch B+ rating such as Kenya, Nigeria and Mozambique.

This upgrade is the first change in rating since 2010 and it shows strong economic growth with a GDP growth average of 6.0% from 2009- 2014 in a stable macro environment.

A track record of prudent and coherent fiscal and monetary policy management is evident in moderate inflation (average 4.6% in 2010-2013),

limited depreciation in the exchange rate successfully steering the economy through the testing donor crisis in 2012/13 when aid disbursements were frozen according to Fitch.

Fitch again expects budget deficit of Rwanda to reduce from 5.1% of GDP in fiscal year 2013/14 to 3.5% in 2015/16 and this is because of the lower net lending and capital spending, current expenditure kept under control and higher taxes.

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Source: AllAfrica

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