FI­NAN­CIAL PRUDENCE

The East African - - NEWS -

Rwanda’s ex­ter­nal debt port­fo­lio is mostly com­posed of con­ces­sional loans pro­vided by mul­ti­lat­eral in­sti­tu­tions, mak­ing up 70 per cent at the end of June, for FY 2017/2018. Do­mes­tic debt is mainly gov­ern­ment se­cu­ri­ties es­pe­cially Trea­sury Bills and Bonds which rep­re­sent 80 per cent of total pub­lic do­mes­tic debt. Al­though con­ces­sional loans still con­sti­tute the ma­jor­ity of pub­lic debt, non-con­ces­sional loans are show­ing a sig­nif­i­cant in­crease.

“Since most of this debt was con­tracted in for­eign cur­rency, the is­sue is whether Rwanda has suf­fi­cient for­eign ex­change to make all pay­ments on time. The good news is that the re­cent surge in ex­ports will help fi­nance ex­ter­nal debt pay­ments go­ing for­ward,” Thomas Alun, the IMF Res­i­dent Rep­re­sen­ta­tive, Rwanda told The East African.

The main medium-term chal­lenge for Rwanda ac­cord­ing to Mr Alun, is to main­tain the cur­rent ex­port mo­men­tum so that when pay­ments for the Pub­lic Pri­vate Part­ner­ships projects ma­te­ri­alise be­tween 2020 and 2027, the ex­port base is suf­fi­cient to make these pay­ments in ad­di­tion to those as­so­ci­ated with cur­rent debt obli­ga­tions.

Rwanda’s debt ser­vic­ing rate is cur­rently slightly higher than in the past due to in­ter­est re­pay­ments es­ti­mated at $26.5 mil­lion a year un­til 2023.

While these pay­ments still re­main well within sus­tain­able lev­els, given the cur­rent macroe­co­nomic out­look, a re­pay­ment risk does arise in 2023, when the prin­ci­pal on the $400 mil­lion Eurobond is­sued in April 2013, falls due.

While across EAC, pub­lic debt has been in­creas­ing faster since 2012, the risk of debt dis­tress re­mains low across the EAC, ex­clud­ing Bu­rundi and South Su­dan ac­cord­ing to the Imf-world Bank Debt Sus­tain­abil­ity Anal­y­sis, 2017.

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