Fitch Ratings, a credit rating agency, has improved Rwanda’s economic outlook to stable from negative, citing better access to international financing and reduced uncertainty over funding.
In a statement released on March 13, the rating agency said the outlook revision reflects greater confidence that the country will continue to secure external financing and that government debt will stabilise in the coming years.
Fitch Ratings also affirmed the country’s Long-Term Foreign-Currency Issuer Default Rating at ‘B+’, indicating that while the outlook has improved, the overall credit rating remains unchanged.
According to Fitch, the improvement follows increased diplomatic engagement that has helped ease tensions in the region and reduced near-term risks related to external financing.
“External disbursements from multilateral and bilateral partners reached around $1 billion, or 6.1% of GDP, in the fiscal year ending June 2025 (FY25). Fitch expects official external loan commitments to remain strong, at about $1 billion annually, through fiscal years 2026 and 2027,” the statement said.
The agency also noted that about 89 per cent of the country’s public external debt is concessional, meaning it carries favourable interest rates and repayment terms, helping reduce the overall borrowing burden.
However, despite the improved outlook, Fitch said public debt levels are expected to rise in the coming years before stabilising.
General government debt is projected to increase to 79 per cent of GDP by 2027, up from 75 per cent in 2025, driven by continued fiscal deficits and major investment projects such as the construction of the new international airport in Bugesera and the expansion of the national airline.
Even so, the concessional nature of most external borrowing is expected to help keep debt servicing manageable. Fitch forecasts that the interest-to-revenue ratio will remain below the projected ‘B’ rating median of about 16 per cent by 2027.
The agency also expects the fiscal deficit to narrow gradually as tax reforms introduced in the previous fiscal year begin to generate stronger revenue.
“The fiscal deficit will decline to 3.6 per cent of GDP in the fiscal year 2026, supported by improved tax collection and policy adjustments. However, lower grant inflows and rising pension spending could offset some of these gains.”
Economic growth prospects remain strong, according to the rating agency.
Fitch estimates that real GDP growth reached 8 per cent in 2025 and expects the economy to continue expanding at above 7 per cent annually through 2027, above the ‘B’, rated country median of 4.5 per cent.
Growth is expected to be driven largely by strong construction activity, particularly infrastructure projects such as the Bugesera airport, as well as expansion in agriculture and tourism, according to the statement.
Despite the positive outlook, the agency highlighted several vulnerabilities that could weigh on the country’s economic profile.
The current account deficit is projected to widen to about 15 per cent of GDP in 2026, mainly due to increased imports linked to large infrastructure projects and strong economic activity.
Fitch also noted that continued reliance on external financing has contributed to a build-up in net external debt, which is expected to reach 65 per cent of GDP in 2026, above the average for countries with similar credit ratings.
Foreign exchange reserves are projected to remain relatively low at 2.7 months of external payments in 2026, compared to a median of 4.3 months for ‘B’-rated economies, highlighting the importance of sustained access to external financing.
Inflationary pressures are also expected to remain elevated.
Fitch estimates that inflation averaged 7 per cent in 2025 and could rise to 7.6 per cent in 2026, driven largely by higher food and energy prices. This may prompt the central bank to tighten monetary policy further.
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