Govt gets IMF nod to issue Eurobond

The government will in the coming days issue the country’s euro bond amounting to US$400 million, which will be used to raise funds for its external debt, officials say.
Finance Minister Amb. Claver Gatete. The New Times/Timothy Kisambira.
Finance Minister Amb. Claver Gatete. The New Times/Timothy Kisambira.

The government will in the coming days issue the country’s euro bond amounting to US$400 million, which will be used to raise funds for its external debt, officials say.

The plan was approved by the International Monetary Fund (IMF) and, once issued, Rwanda’s euro bond will be the first of its kind in East Africa.

 

The announcement was made after a mission led by IMF Mission Chief, Paulo Drummond, ended its sixth review of government performance under the Policy Supports Instruments from April 5- 18.

 

The euro bond is expected to be successful considering investors’ attraction towards well performing economies in developing countries, according to the Ministry of Finance.

 

“Last year, when we had issues with donor aid cuts, the economy still managed to grow by eight per cent, which shows how the economy has matured and can withstand external shocks. We had a shock in 2009 but we still managed to grow by a big margin even when, the region was suffering,” Claver Gatete, the Minister of Finance said in a news briefing on Tuesday.

“The government’s ability and commitment to paying its debt can be determined by looking at how the economy is structured and sustained, and the conduciveness of the investment environment – all of which are present in the Rwandan economy.”

In support of Gatete, Fitch Ratings, one of the most respected rating agencies in the world, last year rated Rwanda’s long-term foreign and local currency Issuer Default Rating (IDR) at ‘B’, indicating the country’s credit worthiness and debt repayment ability.

Government lauded 

The IMF chief also lauded government for adjusting accordingly to the partial suspension and delays in donor budget support.

“The government appropriately adjusted economic policies in 2012 by re-phasing some spending to the first half of 2013 and preparing a supplementary budget this year which reduced current spending in line with available resources,” Drummond said.

IMF also welcomed the second phase of Economic Development and Poverty Reduction Strategy (EDPRSII), which will emphasise innovative and inclusive growth, as well as further reduction of poverty to below 30 per cent.

Meanwhile, reports indicate that, the government is said to have hired international bank BNP Paribas and Citigroup Inc., an American multinational financial services corporation, to manage the sale of the euro bond. 

Government officials however declined to comment on this, citing professional reasons.

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