Rwanda’s capacity to pay back all its current and future debt service obligations has remained stable notwithstanding the external shocks of the global recession on the economy.
This was said by Kampeta Sayinzoga, government’s Chief Economist.
Sayinzoga said the country’s debt sustainability has remained stable and the country will be able to meet its obligations in paying back without debt relief, rescheduling or accumulation of arrears.
“Irrespective of the global economic disorder, our debt has remained sustainable in the medium to long term, measured against the international debt thresholds,” Sayinzoga told Business Times on Tuesday.
Referring to the end of last year, the Chief Economist noted that the net present value of debt to exports which is the key indicator of the country’s debt sustainability was at 44 percent, below the acceptable threshold of 150 percent.
However due to the unpredictable global economic environment during the first half of this year , the projected net present value of debt to exports rose to 83 percent due to slow down in world aggregate demand.
“However this remains below the 150 percent international sustainability threshold. The global economy is healing from crisis, we expect a better performance in our exports than previously projected,” she said, indicating that a positive trend in exports will have a positive impact on the country’s debt outlook.
The country’s current public debt stock denominated in US dollars as of end June this year was at $964.05 million.
By composition, domestic debt stock by end June this year stood at $273.19 million while external debt stock during same period stood at$690.86 million.
Sayinzoga underscored that the current public debt stock has not been affected by the global financial down turn.
“There was nothing like contraction of loans beyond our means to cope up with the crisis and neither are we incapable of servicing our public debt because of the global economic slow down,”
Sayinzoga’s remarks come against the backdrop of International Monetary Fund’s latest regional Economic Outlook which warns that the economic and financial crisis may worsen debt vulnerabilities in sub-Saharan Africa countries.
According to the report, the crisis has adversely affected their capacity to repay, as traditional measured by exports, Gross Domestic Product and government revenues.
The report also mentions that external borrowing has increased in some countries to cushion the impact of the crisis and safe guard social and development objectives.
However, Sayinzoga says there was no loan contracted purposely to mitigate the impact of the crisis.
“ We only received disbursements on outstanding loans and even the few new loans signed were for financing development projects in line with EDPRS and public debt policy ,”
According to country’s public debt policy external loans can only be contracted when the available grants and domestic resources are not enough to finance government expenditure priorities.