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Fitch Ratings talks about the aid cut to Rwanda





Fitch Ratings says that the revised budget passed by the Rwandan parliament reflects the country’s fiscal adjustment capacity and prudent policy relative to its ‘B’ rating. The revised budget for the current fiscal year accounts for lower donor support and subsequent cuts in public expenditures. The budget also anticipates a USD350m (RWF227bn, equivalent to 5% of 2012 GDP) international bond issue, primarily for on-lending to Rwandair and the Kigali Convention Centre.


The revised budget – passed 14 February — estimates the shortfall in donors’ finance amounted to RWF54bn (USD83m, equivalent to 1.2% of 2012 GDP). To accommodate lower aid flows, the budget anticipates sharp spending cuts, including a reduction of 40% in non-wage current expenditure and a reduction of capital expenditure by 7%. Given the public sector’s role in the economy, this will affect domestic demand. The Ministry of Finance and Economic Planning expects growth to slow to about 7.1% in 2013 following 7.7% in 2012 and 9.4% in 2011.

Rwanda will join eight African sovereigns that have issued international Eurobonds. In 2011 and 2012, Namibia (‘BBB-‘) and Zambia (‘B+’), the two latest African sovereigns to issue debut international bonds, benefited from strong market demand from western investors in search for high yields and diversification towards Africa.




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