Standard & Poor’s, one of the three leading international credit rating agencies, has revised Rwanda’s credit worthiness to B+ from an equally good B. This, however, does not come as a surprise to financial analysts. In the middle of last year, another internationally respected agency, Fitch, saw the soundness of Rwanda’s fundamentals and raised the country’s credit outlook from B to B+. In arriving at these conclusions (even though at different times), both agencies based on one core factor: macroeconomic stability and consistent GDP growth. The figures are clear. Annual Gross Domestic Product (GDP) has been above 7 percent in the past 10 years, save for 2013 when growth slowed down to 4.6 percent on account of delays in disbursements and cancellations of donor-budget support in 2012. In the aftermath of the 2012 donor-support debacle, finance gurus at the Ministry of Finance and the central bank shifted focus to capital markets as a source of money to fund infrastructure development projects. Under the quarterly Treasury Bond issuance policy on the domestic market that started last year; and supplemented by hugely successful international bonds, the government hopes to reduce reliance on aid to fund development projects. It turns out that credit rating agencies such Standard & Poor’s see this as good policy shift in as far as it cushions the economy from shocks associated with uncertain development aid. So, in upgrading Rwanda’s credit rating to B+, Standard & Poor’s sees Rwanda’s ability to access capital markets as a guarantee to sustainable economic growth. Therefore, the challenge to economic planners is to continue designing strategies to keep the economy on a high growth trajectory and therefore credit worthy. As the country’s credit outlook continues to improve, the better the prospects for faster growth because it will be able to access cheaper credit from trusting capital markets.
