Rwanda is set to undergo a credit rating, the second in a period of one year.
Last year, Fitch raised its rating for Rwanda to “B”, an acknowledgement of the country’s improved macroeconomic satiability.
American-based Standard & Poor’s (S&P) will carry out the second rating, which is expected to be completed by the end of this year.
During the process, S&P will, among other things, consider Rwanda’s economic status, transparency in the capital market, level of private and public investment flows, political stability as well as foreign currency reserves.
Rwanda’s economy is projected to grow at an average of 8 per cent in the medium term—higher than the average Sub-Saharan Africa growth of 5.5 per cent in 2011, while inflation is expected to be contained to a single-digit.
Rwanda is also projected to consolidate her macroeconomic stability through enhancing domestic revenue mobilisation to trim the fiscal deficit and the country’s aid dependency.
If S&P upgrades Rwanda—which plans to issue a sovereign bond—to a higher rating, it means that investors would be able to easily buy government bonds.
Rwanda has an ambitious development program. However, access to long term capital is still a challenge to both the government and the private sector.
An improved credit rating will, therefore, improve investor confidence and raise the already considerable interest foreign investors have in the country.
This would hence facilitate the government to easily borrow money from large financial institutions or public debt markets to finance its development agenda.