Rwanda's economy to recover this year, more spending seen

KIGALI: Rwanda's economy is expected to grow 5.1% this year after contracting 3.4% in 2020 due to the COVID-19 pandemic, a senior finance ministry official said on Wednesday.

Growth is seen accelerating to 7.0% in 2022 and an average of 7.8% in 2023-24, driven by robust activity in agriculture, industry, mining and construction, Richard Tushabe, the state minister in charge of the National Treasury, told the parliament in presenting a draft budget for the 2021/22 fiscal year.

Tushabe also said Rwanda plans to increase spending in the fiscal year starting July 1 by 10%, to 3.807 trillion Rwandan francs ($3.82 billion). Donors will fund 16% of the budget, with the rest coming from tax revenues and debt, he said.

He said the country would borrow 651.5 billion francs internationally but did not give details before Rwanda presents its final budget in June.

The East African nation's debt level climbed by 13% last year due to borrowing aimed at combating COVID-19, he said.

The country's total public debt rose to 71% of GDP at end of 2020 and is seen reaching 79.7% at the end of this year.

"We admit that the debt levels have gone up... we have not yet reached debt distress level," Tushabe said.

A copy of the draft budget seen by Reuters said that "the main risk associated with Rwanda's debt portfolio is the approaching repayment of the 2023 Eurobond of $400 million."

Rwanda imposed one of Africa's tightest coronavirus lockdowns that battered the country's tourism and other key sectors.

Tushabe said Rwanda aimed to launch a second economic stimulus program worth $250 million to offer low-interest loans to some investors.