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.