Economic performance and outlook: Real GDP growth in the first half of 2017 was an estimated 2.9%, down from 8.2% in the same period in 2016, due to weak performance in services and industry. Services, which accounted for 46% of GDP, increased 6% in the first half of 2017, short of the 9% in the same period in 2016, due to contraction in trade and transport. Steady recovery in 2016 and higher commodity prices, particularly for coffee and tea, led to 5% growth in agriculture during the first half of 2017, down from the 6% in the same period in 2016. Agriculture accounted for 32% of GDP. Industry, which accounted for 15% of GDP, posted zero growth in the first six months of 2017, down from 10% in the second half of 2016, due mainly to completion of major construction projects and weak performance in mining and quarrying. Economic performance improved in the second half of 2017 and is projected to continue to do so in 2018, due to favorable weather conditions and higher commodity prices.
Macroeconomic evolution: The government’s 2016/17 fiscal policy remained focused on public expenditure efficiency to support growth and reduce poverty, in line with its fiscal consolidation strategy. The fiscal deficit in 2016/17 was 1 percentage point lower than projected. The tax-to-GDP ratio in 2016/17 remained stable at an estimated 15.6%, due to tax incentives that support the Made in Rwanda campaign to increase domestic production. The 2017/18 budget is expected to continue fiscal consolidation and is characterized by stable development spending and gradual growth in recurrent spending, due partly to a new teacher’s statute and increasing wages. The Central Bank implemented an expansionary monetary policy in the first half of 2017 to support growth in private-sector credit. In the same period credit to the private sector increased 8.3%, slightly higher than the 8% in 2016, and headline inflation was 7.5%, above the 5.1% in the first half of 2016, due to higher food prices. The trade deficit narrowed due to increased exports as a result of improved production and higher commodity prices. The Rwandan franc was relatively stable. The risk of external debt distress remains low, though greater domestic revenue mobilization is required to maintain debt sustainability.
Tailwinds: Agriculture remains an important contributor to growth; industry’s contribution is expected to increase with industrialization efforts. Three factors are likely to influence the economic outlook. First, the recovery in commodity prices and global demand is expected to increase export revenues and contribute to a build-up in official reserves. Second, ongoing investment in fertilizer, improved seeds, and irrigation, as well as higher prices for coffee and tea, are expected to boost food and export crops. Third, the Made in Rwanda campaign and public infrastructure investment are projected to boost growth in industry.
Headwinds: The country is vulnerable to weather shocks affecting the largely rain-dependent agriculture sector; ongoing investment in irrigation will reduce rainfall dependence. Given that the country exports predominantly unprocessed raw materials, any fluctuations in commodity prices will reduce export earnings and increase external sector vulnerabilities. Initiatives such as Made in Rwanda seek to increase value addition, reducing vulnerability to commodity price fluctuations. Insecurity and instability in the Great Lakes Region, a major trading partner, pose risks. Regional peace and security measures, including those under the African Union and the International Conference on the Great Lakes Region, are expected to increase peace and stability.
Guide to Buying Bonds
Procedures for market participation
The National Bank of Rwanda (NBR) announces upcoming auctions four days in advance. Banks and financial institutions are eligible to participate provided they opened an account an investment account with a stockbroker or at the Central Bank. All other investors must contact their commercial banks and receive approval from the Central Bank before participating.
Interest earned on fixed-income securities is subject to a 15% withholding tax; a 5% reduction is available on interest earned on Treasury bonds of 3 years or more.
Settlement cycle is T+2.
Openness to international investors
The investment climate in Rwanda has drastically improved in recent years. The government has made great strides in improving the business environment, particularly with respect to entrepreneurial activities. It now takes 3 days to start a business, when it takes an average 45.6 days in other Sub-Saharan countries (the average for OECD nations is 13 days and 5.7 procedures).
There are no capital controls in Rwanda.
Foreign exchange controls and profit repatriation
Rwanda has a floating exchange rate regime in which the Rwandan franc is maintained within a narrow range against the US dollar. Foreign investors can freely repatriate profits, dividends, royalties and interest payments.
There is no difficulty in obtaining foreign exchange, or transferring funds; it is to be noted however that transfers over $20,000 require documentation to comply with the stipulations of anti-money laundering regulations (the regular transfer time is 3 days).
In 2014, Fitch upgraded the foreign and local long term issuer default ratings from B to B+. On September 2015, S&P has confirmed the B+ rating on Rwanda debt and given it a stable outlook.
List of Primary Dealers
There are no primary dealers in Rwanda.
Documents & Resources
Documents - Ministry of Finance
- Rwanda_Budget_Outlook-2013_to_2016.pdf (238 kB)
- Rwanda_Fin_Sector_Strat_Plan-2013-18.pdf (899 kB)
- Rwanda_MTDS-2015_16.pdf (1.00 MB)
Documents - Central Bank
- Law governing National Bank of Rwanda (493 kB)
- Bank_of_Rwanda_-_Annual_Report_2013-14.pdf (4.84 MB)
- Rwanda_Fin_Stab_Report-2013-14.pdf (16.43 MB)
- Banking_laws-Rwanda.pdf (498 kB)
- Rwanda_Tbills_Calendar_June_2015-2016.pdf (213 kB)