Standard & Poor’s (S&P), an global financial services firm, has raised Rwanda’s ranking from a flat “B” to “B+” ther by boosting shareholder trust in the nation.
The global credit rating agency believes that Rwanda’s economic growth prospects are greater than colleagues ‘ backed by, among others, stable investment rates of about 25 percent of GDP.
A sovereign credit rating is an autonomous evaluation of the creditworthiness of a country. It is essential because it provides investors insight into the level of danger associated with investing in a specific country’s debt, including any political risk.
According to the recent S&P worldwide business intelligence insights, despite scheduled fiscal development, the company expects government debt rates to stay moderate and comparatively low debt-service expenses.
“We are therefore raising our long-term sovereign credit rating on Rwanda to ‘B+’ from ‘B’, and assigning a stable outlook,” reads part of the credit rating agency’s overview on Rwanda’s economic growth.
The Minister of Finance and Economic Planning, Uzziel Ndagijimana, welcomed the overview of the credit agency, which he reiterated is based on the powerful development “from last year,” the debt condition, and general stable macroeconomic leadership.
“This is good for investors; being recognized by independent credit rating agencies gives confidence to investors but it comes adding to the other positive indicators and publications.”
At the same moment, S&P Global Ratings also updated the country’s transfer and convertibility (T&C) evaluation from ‘ B ‘ to ‘ B+.
“The outlook is stable because we expect Rwanda will continue to achieve above-average real GDP growth over the medium term, balanced against risks of fiscal slippages and rising government debt.”
“We may lower the rating over the next year if the government’s investment program significantly increases external financing requirements and external debt above our current projections. We could also see downward pressure on the rating if higher fiscal deficits lead us to reassess Rwanda’s management and sustainability of public finances.”
An extra downward trigger could be, it is noted, if the current Ebola crisis in the DR Congo has a significant impact on Rwanda’s economy and exports.
Although they do not see further scores upside down in the near term, they noted, they may increase the score in the medium term if the internal perspective improves significantly, potentially as a consequence of public measures to diversify exports.
“We could also raise the rating if income levels rise more rapidly than our current projections.”
The rationale of the S&P Global Ratings is that Rwanda has shown powerful development in GDP and above- average growth patterns per capita compared to colleagues.
The financial services business expects elevated development will be driven mainly by public investment, which will probably lead in large fiscal deficits and increasing levels of government debt.
Nevertheless, Rwanda’s track record of providing inclusive growth through government- funded projects and wider macroeconomic initiatives remains fairly sound.