The government will use proceeds from the second Eurobond of up to $1 billion it plans to issue next year to fast-track the construction of Bugesera International Airport and a 150 megawatt power station, Amb. Claver Gatete, the minister for finance and economic planning, has said.
Amb. Gatete was confirming President Paul Kagame’s announcement on the sidelines of the US-Africa Leaders Summit in Washington DC on Tuesday.
The President told reporters in the US that Rwanda would more than double the amount they sought in the 2013 $400 million external bond to up to $1 billion.
Speaking to The New Times yesterday, Amb. Gatete said the ministry was already working on the modality of the international bond issue “to determine how much and when exactly to go to the market.”
“For the Bugesera International Airport, we are still negotiating with the private sector. We have to understand the role of their engagement and that of the government so that we know the exact contribution from the government,” Amb. Gatete said.
He added that they cannot know how much to contribute or when it is needed can before they complete the negotiation.
The minister said after gauging the specific amount of funding required for both projects, they will select a “suitable time next year to issue the bond.”
In April last year, government issued $400 million bond to fund the completion of the Kigali Convention Centre and RwandAir’s expansion programme, which was more than eight times oversubscribed.
Minister Gatete said investing in the new airport was part of the government’s continuous investment in the tourism sector.
“Last year, we earned $293 million from tourism; a reason why we are investing a lot in the sector - from the airlines, to the hotels, conference halls, customer service and airports,” he said.
Richard Masozera, director-general of the Rwanda Civil Aviation Authority, told The New Times that the airport’s construction works would take about five to six years to complete once they secure funding.
Alert on borrowing
On concerns that the government is borrowing too much, Gatete assured the public that there is no cause for alarm.
“We haven’t reached the limit…we cannot go beyond our limit. To remain as an attractive debt market, we have to remain within our borrowing limit, and also maintain high ratings to win investors confidence,” he said.
Commenting on the development, Robert Mathu, the Capital Markets Authority executive director, said the international capital market is the way to go, saying emerging Africa needs more long-term investment capital to meets its development targets.
“As for Rwanda, the recent international credit rating upgrade to B+ will favour market appeal from investors,” he said.
Rwanda’s economy is projected grow 7.5 per cent, according to estimates from the International Monetary Fund.
There is growing demand for Rwanda’s debt, especially from offshore and institutional investors, underlining investor confidence in the local economy.
For instance, the IFC, World Bank’s private sector lending arm, Rwf15.5b local currency-based bond issued in May was oversubscribed by over 111 per cent, raking in Rwf32.8b.
In February, government issued a Rwf12.5b bond that was oversubscribed by 140 per cent.