Rwanda plans to spend an estimated Rwf699.4 billion on the ongoing construction of an international airport in Bugesera and the national carrier RwandAir expansion, according to information The New Times got from the Ministry of Finance and Economic Planning (MINECOFIN). The outlay covers three fiscal years, running from 2025/26 to 2027/28, it indicated. This is in line with the Budget Framework Paper for 2025/26 - 2027/28, which is the government’s overall fiscal strategy document for the three-year period. ALSO READ: PHOTOS: Rwanda’s new international airport ground-level works 85% complete It is expected that the airport will start being operational in 2028. Its construction is projected to cost $2 billion in total. While presenting the budget framework paper to Parliament on Thursday, May 8, the Minister of Finance and Economic Planning, Yusuf Murangwa, said that the government plans to spend more than Rwf7 trillion in 2025/2026. This amount represents an increase of over Rwf1.2 trillion or 21 per cent compared to over Rwf5.8 trillion approved for the current fiscal year. Murangwa stated that the increase in budget will mainly be occasioned by fast-tracking the construction of the new international airport and the expansion of the national airline RwandAir. These are described as strategic investments. ALSO READ: RwandAir records 80% revenue growth in 2023 The airport in Bugesera and RwandAir expansion to drive external loan Regarding external debt, the budget framework paper showed that the government will borrow an estimated Rwf2.15 trillion for the coming fiscal year, which will be Rwf648.4 billion higher compared to over Rwf1.5 trillion of the current year. Borrowing related to second phase of Bugesera airport construction and expansion of RwandAir are the main drivers of the increase, according to the ministry. ALSO READ: Ten things we know about the Rwanda-Qatar Airways deal Medium-term external debt policy MINECOFIN indicated a preliminary debt sustainability analysis showed that the debt sustainability indicators in the medium term will shoot up to accommodate financing for the implementation of the second phase of the Bugesera airport project and the expansion of RwandAir in 2025, in a joint venture with the Qatar Investment Authority. The Rwandan government will contribute 40 per cent of equity stake and 59 per cent in both the airport and airline, respectively. With this financing, the economic growth and development agenda for the second National Strategy for Transformation (NST2) is expected to boost significantly, MINECOFIN observed. As a result, it stated, the debt will remain sustainable with loan servicing impact expected to be mitigated by new tax measures (some of which have recently been passed by cabinet) and various derisking instruments the government is actively exploring. ALSO READ: Proposed tax changes set to rake in Rwf300bn annually However, the debt consolidation path of 65 per cent of Rwanda’s gross domestic product (GDP) that was expected to be achieved by 2031 may delay for two to four years, MINECOFIN concluded. In order to keep a moderate risk of debt distress, the overall debt strategy will focus on maximising concessional funding opportunities to minimise debt servicing pressures; prioritise fixed instruments to avoid effects of volatile market interest rate; develop the domestic market to reduce dependence on foreign currency debt while reducing refinancing risks with issuance of long-term securities, such treasury bonds. Other measures are proactively taking liability management operations whenever possible to avoid refinancing risks; boosting Rwanda’s exports to build buffers for debt sustainability; and finally recalibrating the fiscal consolidation path with strengthening of domestic revenue mobilisation, spending rationalisation and mitigation measures for fiscal risks arising from State Owned Enterprises, power purchase agreements, among others.
