• Rwanda’s public debt reached 74.8% of GDP, below the 80.5% initial projection.

• Concessional loans account for 88.2% of external debt, supporting sustainability.

• Debt servicing costs are rising, reflecting growing fiscal pressures.

Rwanda maintained its public debt at 74.8% of gross domestic product at end-June 2025, below earlier projections of 80.5%, according to a report published on April 27 by the Rwandan Ministry of Finance.

Authorities attributed the improved debt ratio to disciplined macroeconomic management, an upward revision of GDP and phased financing of major infrastructure projects. Key projects include the new Kigali international airport and the expansion of RwandAir, which authorities are funding progressively to limit fiscal strain.

Moreover, the debt structure remains favorable. Concessional financing accounts for 88.2% of external borrowing, which reduces overall funding costs and supports debt sustainability.

The government has continued reforms of state-owned enterprises, combining targeted privatizations, governance improvements and debt restructuring to mitigate fiscal risks.

In addition, Rwanda repaid a $400 million Eurobond in 2023 and reduced short-term domestic debt, which helped ease refinancing pressures and improve the maturity profile of its obligations. However, debt servicing costs are increasing despite overall stability. External debt service rose from $247.6 million in FY2023/2024 to $285.6 million in FY2024/2025.

This increase represents 9.1% of exports, compared with 8.7% a year earlier, and 9.5% of government revenue, up from 8.1%.

On the domestic market, debt service also increased from 339.6 billion to 354.9 billion Rwandan francs. While principal repayments declined from 103.1 billion to 95.7 billion francs, interest payments rose from 236.4 billion to 259.1 billion francs, indicating higher local financing costs.

Structural investments but persistent vulnerabilities

Despite a sustainable trajectory, Rwanda’s debt remains under pressure from large-scale investments in infrastructure, social services and strategic projects such as Bugesera airport and RwandAir.

Fitch Ratings expects public debt to peak at around 79% of GDP in 2027 before stabilizing gradually.

This outlook reflects several vulnerabilities, including persistent primary deficits, reliance on foreign currency-denominated debt—of which nearly 80% is external—and exposure to exchange rate fluctuations and rising global financing costs. In response, Kigali is focusing on strengthening domestic revenue mobilization, controlling public spending and increasing access to concessional financing.

Authorities are also developing the domestic bond market and exploring innovative financing mechanisms to maintain debt sustainability over the medium term.

This article was initially published in French by Charlène N’dimon

Adapted in English by Ange J.A de Berry Quenum