The Rwandan economy is projected to grow by 9.5% in 2025 according to the 2024 Sovereign Rating Report on Rwanda released by Agusto & Co.
According to the report, the Rwandan Economy was given a B+ rating with the report also ascribing a stable outlook to the Rwandan economy in 2025.
Export Earnings Driving Growth
The report reveals that Rwanda’s export earnings grew by 16.8% year-on-year (YoY) to USD 2.5 billion in the 2023 financial year due to a 6.1% increase in non-traditional exports like manufactured food products and construction materials by Rwanda.
Following growth in the export of traditional goods at the end of Q2, 2024, the value of Rwanda’s export earnings slightly increased by 0.9% while the value of imports increased by 6.4% due to a rise in the import of consumer goods (8.3%), capital goods (3.7%) and intermediate goods (5.7%).
Rising Expenditure
Rwanda’s expenditure however stood at RWF 95.8 billion above budget at the end of 2023/24 financial year, due to higher spending on infrastructure repairs and maintenance following flood damage in the country, as well as relief efforts for flood-affected communities.
The expenditure is expected to further rise in the short to medium term but its impact would be countered by the improved domestic revenue
mobilization expected through the ongoing tax law revisions and the digitalization of the revenue collection process.
Rwanda’s public debt also rose by 29.8% to RWF 12,022 billion (73.5% of GDP) as of December 2023, as a result the country’s estimated debt service to revenue ratio reached 12.2%. It is however still within IMF’s Debt sustainability ratio of 30%.
Trade Deficit Problems
In Q2, 2024, Rwanda’s trade deficit expanded by 9.5% following a rising oil import bill, owing to expected increases in global crude oil prices. A decline in global prices of coffee and Tea, which accounts for much of Rwanda’s export is also expected to increase the country’s trade deficit by 10% come December, 2024.
Multiple Revenue Stream Paying Dividends
Rwanda’s growth in 2024 and positive projections in 2025 is due to the country’s ability to accrue revenue from multiple sources like additional revenue from administrative fees and charges, higher-than expected disbursement of grants from foreign governments, particularly the grant from the UK relating to the Asylum partnership.
As a result of these extra revenue not accounted for in the budget, the total amount accrued to the Treasury amounted to RWF 3,801.4 billion, a figure exceeding the National budget by 57.4 billion Rwandan Franc.
2025 Projections
Agusto & Co expects a 9.5% GDP growth for Rwanda in 2025 compared to 9.0% in 2024 owing to the promise of a strong performance in the service and industrial sectors, as well as a recovery in the agricultural sector following improved output from Season A8 of the country’s agricultural cycle.
The Rwandan government’s focus on attracting investments in strategic sectors such as tourism, renewable energy, and infrastructure also positions the country as an attractive location for business and investment, driving further economic expansion.
Improved food production, tighter monetary policies, and easing international commodity prices is also expected to ease the country’s inflation by 5% while the political stability expected after President Paul Kagame secured another five-year term till 2029 is hoped to bring reduction in unemployment and further solidify economic gains in the Rwandan economy. Inflation is also expected to decrease to a single digit rate of 4% in 2025, sustaining the single digit rate it hit in 2024.
All these factors are expected to contribute to the growth of the Rwandan economy in 2025.
