Rwanda Resilience Holds, But Funding Mix Matters

Rwanda’s near-term growth momentum remains solid, with projections indicating output could rise toward the mid-7 percent range by 2026. The expansion is anchored in public and private investment across construction, logistics, and services, supported by disinflation that is gradually improving real household purchasing power. Yet the sustainability of this momentum depends as much on financing mechanics as on the growth headline itself.

Bond rollover risks and FX liquidity remain the key watchpoints. Concessional inflows and export receipts—particularly from tourism and air transport—will determine how comfortably Rwanda sustains its external position. Tourism volumes have yet to fully normalise, and agricultural terms of trade have improved less than anticipated, leaving some exposure to commodity price swings. The policy rate remains restrictive in real terms, constraining credit growth even as banking-sector capital remains sound. Loan pricing still carries high risk premiums, limiting private credit recovery.

To secure a soft landing, fiscal strategy must keep shifting from broad subsidies toward targeted social transfers while mobilising private capital for housing, warehousing, and energy infrastructure. Structural investment execution will decide whether macro resilience translates into inclusive growth. Policymakers aim to maintain a credible primary-balance path and safeguard external buffers, with foreign reserves covering more than four months of imports.

Over the next two quarters, key indicators to monitor include inflation’s glide path, current-account funding composition, and the number of private-sector projects reaching actual implementation. If execution holds and concessional inflows remain steady, Rwanda should defend growth near 7 percent through 2026 with manageable external pressures. However, a weaker tourism season or delayed financing could widen spreads and test FX stability.