Fitch Keeps Rwanda at B+ as External Financing Risks Mount

By Mintesinot Nigussie  |  September 18, 2026

Fitch Ratings has affirmed Rwanda’s long-term foreign-currency issuer default rating at B+, with a stable outlook, while warning that the country’s widening external financing needs and exposure to regional security risks remain key constraints on its credit profile.

The ratings agency expects Rwanda’s current-account deficit to approach 15 percent of GDP in 2026, up from an already persistent deficit, as strong domestic growth drives imports and spending on the Bugesera airport project increases. Higher fuel and fertiliser costs associated with the war in Iran are also expected to add to the pressure.

Fitch forecasts Rwanda’s net external debt to reach 63 percent of GDP this year, compared with a median of 48 percent for countries rated B. Foreign-exchange reserves are expected to cover only 3.2 months of current external payments, below the 4.2-month median for B-rated sovereigns.

The agency said the vulnerability is partly offset by the structure of Rwanda’s external borrowing. About 87 percent of external debt is concessional, while multilateral and bilateral partners are expected to provide about 82 percent of Rwanda’s external financing in fiscal years 2027 and 2028.

“Continued access to external financing” will therefore remain important to Rwanda’s ability to finance its external deficits, Fitch said.

Rwanda’s fiscal position is expected to remain relatively stable. Fitch forecasts the fiscal deficit at 4.5 percent of GDP in the fiscal year ending June 2027, compared with 4.4 percent in fiscal 2026. Spending cuts, particularly lower capital expenditure, are expected to offset weaker growth in government revenue.

The agency expects government debt to decline after reaching about 74 percent of GDP in fiscal 2025, averaging 65 percent of GDP in fiscal 2027 and 2028. Strong nominal economic growth is expected to account for most of the reduction, although the debt ratio will remain above the 56 percent median for B-rated sovereigns.

Economic growth remains a key strength in Rwanda’s credit profile. Fitch forecasts real GDP growth of 7.8 percent in 2026, despite a slowdown from 9.4 percent in 2025. Agriculture, services and construction are expected to support expansion, with the Bugesera airport project remaining a significant source of construction activity ahead of its expected completion in early 2028.

Inflation, however, is expected to remain elevated. Fitch forecasts average inflation of 11.7 percent in 2026, well above the central bank’s 2 percent to 8 percent target. The central bank has raised its policy rate by a cumulative 150 basis points since February to 8.75 percent.

Regional security remains another risk to the outlook. Fitch said continuing ceasefire violations between the M23 armed group and the Democratic Republic of Congo’s armed forces, alongside M23’s control of parts of eastern Congo, leave the region’s security situation fragile despite a US-brokered peace agreement and Qatar-mediated talks.

The agency does not currently expect a sharp resurgence of the conflict on the scale seen in early 2025. But it warned that a significant deterioration could reduce Rwanda’s access to external financing.

Recent US sanctions targeting Rwandan military and mining entities have not so far disrupted sovereign external financing inflows, Fitch said. Multilateral support, including a new IMF financing arrangement agreed in June 2026, continues to support Rwanda’s access to concessional funding.

Fitch’s assessment places Rwanda one notch above the score generated by its sovereign rating model. The agency’s model produces a B rating, while a qualitative adjustment for Rwanda’s access to substantial concessional financing and its sustained growth raises the final rating to B+.

The stable outlook could come under pressure if international reserves fall substantially, concessional financing or foreign direct investment declines, or external financing needs rise because of geopolitical risks or larger fiscal deficits.

Conversely, Fitch said a durable improvement in regional security or a sustained reduction in public debt could support a future upgrade.

Source: FSX Business News