2 February 2018

Rwanda: Debt Levels Manageable - Govt

Photo: World Bank

Government has dismissed reports of Rwanda's debt levels saying the country is still in the low risk category.

Minister of Finance Claver Gatete said that as at the end of 2017, Rwanda's external debt level to Gross Domestic Product was at 36.6 per cent which is below the East African threshold of 50 per cent.

Domestic debt stands at about 10 per cent.

However, this is a slight increase compared to end 2016 whereby external debt to GDP stood at 35.2 per cent while domestic debt was about 9.4 per cent.

The International Monetary Fund ranks countries in four categories depending on their debt levels, low risk, moderate risk, high risk and in debt distress being the highest.

Low risk where Gatete said that Rwanda's falls is when all the debt burden indicators are below the threshold.

Gatete said that there is no cause for alarm over the debt levels saying that beyond the EAC threshold other indicators showed risks levels continue to be low.

He added that the government has been cautious in debt management including managing expenditure.

The minister noted that other aspects that showed Rwanda's debt levels were manageable include ability to service the debts and rising exports.

"We cannot take more debts than we can handle. There is caution on how we go about debt management. Also when you look at aspects such as debt servicing, rising exports and reducing trade deficit among others, our debt levels are very manageable," Gatete said.

Rwanda's debt levels have in recent years been driven by investments in large investment projects for instance expansion of RwandAir and Kigali Convention Centre. The debt levels have also been influenced by the country's ambition to steer away from development assistance and donations towards dependence and concessional loans.

Public debt levels continue to be a reason of concern among regional countries with the IMF cautioning countries on their debt burdens.

In its latest Regional Economic Outlook report, the IMF observes that the median level of public sector debt in sub-Saharan Africa rose from about 34 per cent of gross domestic product in 2013 to 48 per cent in 2016 and could exceed 50 per cent in 2017.

Among the causes of concern also include the fact that global interest rates have been rising steadily making it harder for low income countries to pay back money borrowed.

Low income countries often owe private lenders, multilateral institutions (such as World Bank, IMF, African Development Bank) as well as other governments.

Rwanda

What Twitter Data Review Says of Region's Presidents

Burundi president Pierre Nkurunziza is the most shunned leader in East Africa while Yoweri Museveni of Uganda is likely… Read more »

See What Everyone is Watching

Copyright © 2018 The New Times. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 800 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.