(The following statement was released by the rating agency)
LONDON, April 16 (Fitch) Fitch Ratings has assigned Rwanda's forthcoming USD
bond issue an expected 'B(EXP)' rating.
The rating is in line with Rwanda's 'B' Long-term foreign currency Issuer
Default Rating, on which the Outlook is Stable.
Fitch affirmed Rwanda's ratings on 20 August 2012.
KEY RATING DRIVERS
Rwanda's rating is supported by solid economic policies and a track record of
structural reforms, macroeconomic stability and low government debt (23.3% of
GDP in 2012). The rating is constrained by structural weaknesses including low
GDP per capita (USD644 in 2012 versus USD3,345 for the 'B' rated countries
median), limited economic diversification and dependence on international donors
(38% of budget receipts in fiscal year 2012/13).
Lower reliance on international aid, improved economic diversification, and a
stronger export base that enabled a fall in the current account deficit would be
President Kagame's lengthy rule and the stability it has brought highlight the
importance of an orderly succession after 2017. Any threat to political
stability would be rating negative.
Despite some delays in aid disbursements in fiscal year 2012/13, Fitch's central
scenario is that Rwanda will continue to attract significant budget support
flows, reflecting its strong track record in poverty reduction and control of
Fitch expects real GDP growth to remain robust in the medium term, in line with
past performance between 7% and 8% per annum, primarily supported by investment
and external demand for minerals, tea, coffee and tourism.
Fitch forecasts the budget deficit will narrow to 2.3% of GDP by fiscal year
2014/15 from 5.9% in fiscal year 2012/13. This reflects both lower public
expenditure on account of improved prioritisation of spending and the increase
in tax revenue owing to GDP growth and on-going reforms to increase the tax
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The ratings above were solicited by, or on behalf of, the issuer, and therefore,
Fitch has been compensated for the provision of the ratings.
Applicable criteria, Sovereign Rating Methodology, dated 13 August 2012, are
Applicable Criteria and Related Research
Sovereign Rating Methodology
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