Inside Rwanda's strategy for manageable loan repayments #rwanda #RwOT

Minister Murangwa explained that Rwanda's approach to foreign borrowing focuses on securing favorable loan terms to support sustainable development.

One of the key factors in this strategy is ensuring that loans come with extended grace periods. In some cases, these grace periods last more than five years before repayment begins, making the loans easier to manage. Additionally, many loans offered to Rwanda come with low-interest rates, making repayment more feasible.

"When we take loans for agricultural investment, we receive favorable loan terms, including grace periods of up to six years before repayments start. The project can be implemented within two to three years, which means by the time we begin repayment, the project is already generating returns," he noted.

Rwanda's long-term loans, particularly those linked to infrastructure and development projects, are structured to allow ample time for repayment.

Minister Murangwa emphasized that the repayment periods for some loans extend up to 40 years, with some projects having a five-year grace period before repayments begin. Furthermore, the interest rates are remarkably low, sometimes as low as 1%, 2%, or even 0%.

Long repayment periods and low-interest rates are crucial for ensuring that the country manages these loans effectively and invests in key development areas without putting undue pressure on state finances.

When taking on foreign loans, Rwanda evaluates three key factors to ensure they do not become a financial burden. According to the Minister, these include selecting the right projects for investment, ensuring the successful execution of these projects, and negotiating favorable loan terms.

'By making informed decisions on projects and securing favorable terms, we can confidently manage our foreign loans,' he stated.

Minister Murangwa also reassured that Rwanda is in a strong position financially and faces no difficulties in repaying its loans. In fact, in November 2025, S&P Global awarded Rwanda a B+ rating for its ability to repay long-term loans and a B rating for short-term repayment.

Rwanda's national debt remains manageable. As of 2024, Rwanda's foreign loans amounted to Rwf 11.846 billion, which represents 80.1% of the country's total loans. The largest share of these loans consists of concessional loans, totaling Rwf 10.392 billion.

These loans are primarily sourced from institutions like the World Bank, the African Development Bank, and the International Monetary Fund, totaling Rwf 8.885 billion.

While concessional loans make up the majority of Rwanda's foreign debt, a smaller portion is from commercial loans, which amount to 9.8% of the total, or Rwf 1.454 billion. Some state-affiliated businesses, such as RwandAir, also contribute to Rwanda's foreign borrowing, with RwandAir alone having a loan of 66.8 million USD.

In addition to foreign loans, Rwanda also manages domestic loans, which accounted for 20% of the country's total debt as of 2024, totaling Rwf 2.935.9 billion. These loans are mainly taken by the government and state-owned enterprises, often issued through treasury bonds placed on the market by the National Bank of Rwanda.

Minister Murangwa highlighted that Rwanda is focused on increasing domestic revenue to reduce reliance on foreign loans. This is being achieved through tax reforms, improving resource mobilization, and ensuring efficient use of the national budget. He also pointed out that reforms are being made to enhance transparency and improve the management of public assets and investments to prevent inefficiencies and reduce losses.

For the 2025/2026 budget, Rwanda plans to use domestic revenue totaling Rwf 4.105.2 billion, with foreign aid reaching Rwf 585.2 billion, and foreign loans amounting to Rwf 2.151.9 billion. The country's GDP is projected to increase by 7.1% in 2025, indicating a positive outlook for economic growth.