Rwanda has faced multiple pressures on her finances brought on by ongoing global shocks linked to the prolonged impact of the Covid-19 pandemic, the war in Ukraine, and the appreciation of the US dollar.
However, this did not deter the East African Nation from successfully repaying its $400 million Eurobond.
According to information obtained by The EastAfrican, a media house focused on East African news, the payment, was successfully made just before the deadline this week.
Representatives of Rwanda’s Ministry of Finance and Economic Planning stated the following:
“The government has set aside $63 million as part of the International Monetary Fund’s Special Drawing Rights (SDR) allocation that it received in 2021 as support to fight against the impact of Covid-19 on the economy. This foresight and proactive measure by the government have significantly reduced the risk of default and allowed a successful repayment of the remaining 15.1% of the 2013 Eurobond.”
Rwanda was also able to reduce its debt load during the pandemic when it used the second $620 million Eurobond, issued in response to the low-interest rate environment, to pay back a portion of the $400 million. The coupon rate on the $620 million 10-year Eurobond issued in April 2021 was 5.5%, which was lower than the 2013 rate of 6.625%. Over the following ten years, the lower yield resulted in a decrease in its yearly interest payments, which helped make its debt manageable. With public and publicly guaranteed debt growing substantially to 78.3% of GDP in 2021 from a pre-pandemic ratio of 60.7% of GDP in 2019, the government has borrowed heavily in recent years to support economic recovery and development initiatives. However, with long maturities and low-interest rates, development finance institutions are responsible for about 80% of this debt’s concessions.