Rwanda turns to domestic borrowing

Rwanda’s central bank has issued seven-year Treasury bond worth Rwf15 billion to revive the economy from the pressures of external borrowing.

The government of Rwanda has once again turned to the local debt market in order to raise money to fund several infrastructure projects.

According to the central bank, institutional investors can deposit their bond application forms while retail investors can approach their brokers.

International Monetary Fund (IMF) warned that Rwanda may not its ambition of transforming into a middle income economy by 2035 if it continues depending on external lenders and donors.

As reported by Watchdog, central bank Governor, John Rwangombwa attributed the swelling import bill to the ongoing execution of huge projects.

Rwangombwa revealed that construction of the US$818 million New Bugesera International Airport in Eastern Province, US$350 million Gisagara peat energy plant in Southern Province among other projects.

“Rwanda’s formal trade deficit increased by 12.4 per cent, resulting from the rise of import bill by 9.5 per cent that outweighed 5.5 per cent increase in export earnings,” Rwangombwa said.

In addition to big projects, Rwangombwa said that demand for intermediary goods for industrial construction was also among other factors.

Central Bank says that imports of capital goods increased by 10.4 per cent while imports of intermediary goods increased by 12.4 per cent. As a result, formal exports cover of imports slightly declined to 41.1 per cent in 2018 from 42.6 per cent in 2017.

The initial design for Bugesera International Airport was revised for future expansion of the airport.

In 2016, Rwanda signed a deal with Portuguese firm Mota Engil Engenharia e Construcao Africa, a Portuguese firm for new aviation facility.

The first Phase will cost US$418 million, initially scheduled for completion by December 2019.

On completion of the first phase, extension works will be undertaken worth US$400 million, bringing the total cost of the project to US$818 million expected to handle over 4.5 million passengers annually.