• Rwanda maintained strong growth and adequate reserves, but external pressures are mounting.
• Public debt is projected to rise toward 80% of GDP by 2027, driven by major state-led projects.
• IMF urges tighter fiscal discipline as the current account deficit widens and imports surge.

The IMF Executive Board has completed the 2025 Article IV consultation with Rwanda and finalised the sixth and last review under the Policy Coordination Instrument (PCI). While acknowledging the country’s resilient economic performance over the past year, the Fund also highlights growing fiscal and external imbalances that could challenge the stability achieved since 2022.

Rwanda posted 7.2% growth in 2024 and early 2025, supported by services, construction, and a rebound in coffee exports. Inflation remained within the National Bank of Rwanda’s target band, and foreign-exchange reserves covered about 4.8 months of imports as of end-June 2025, an essential buffer amid global uncertainty.

However, the broader picture is mixed. The current account deficit widened in the first half of 2025, reflecting strong imports of consumption and capital goods. This has heightened pressure on external balances despite still-adequate reserves. On public finances, the IMF warns that spending on large infrastructure projects, such as the new Kigali international airport and investments linked to RwandAir, continues to drive higher external borrowing. According to the Fund, public debt could reach around 80% of GDP by 2027, compared to roughly 67% in 2022.

The IMF therefore stresses the need for credible fiscal consolidation, including more effective domestic revenue mobilisation, stricter oversight of state-owned enterprises, and better prioritisation of public investment. The institution also points out the importance of maintaining a data-driven monetary stance and allowing greater exchange-rate flexibility to help the economy absorb future shocks.

Beyond macroeconomic indicators, the report notes structural challenges, including low export diversification, climate vulnerabilities, and the need to strengthen private-sector competitiveness, all of which continue to limit Rwanda’s ability to reduce its reliance on external financing.

With the PCI now completed, Rwanda will enter a Post-Financing Assessment cycle due to its outstanding obligations to the Fund. The country is expected to continue advancing the goals of the Second National Strategy for Transformation (NST2), but under tighter financing conditions and closer scrutiny of debt sustainability.

By Cynthia Ebot Takang