The biggest test for Rwanda’s economy is coming next financial year 2022-2023, when the repayment of its $400 million Eurobond is due.
The bond was issued in 2013, with a 10-year maturity period. Half the proceeds from the issue were used to repay outstanding loans on the Kigali International Convention Centre and on a development plan for the national carrier, RwandAir.
A decade later, the magnificent Convention Center is a ghost complex with no clients and RwandAir is on its knees – both grand projects heavily impacted by the COVID-19 pandemic.
But for the investors convinced by French banking giant BNP Paribas and America’s Citigroup that Rwanda was a perfect bet, they are expecting their pay-day no matter the circumstances.
When Finance Minister Dr Uzziel Ndagijimana, if he will still be in his role, reads the budget to the nation around this time next year, he is preparing to tell the country that at least 15% of the project budget will be sent out to foreign lenders.
The country will be required to pay a total of $502.3m (over Rwf 499bn) as both principal and interest for a variety of loans from different lenders including the Chinese, Arab countries and the World Bank, according to the government’s own projections. Among other creditors is Equity Bank Group, the Kenyan bank with operations in Rwanda as well.
The data is contained in a cache of documents that The Chronicles obtained which spell out in grim detail how much Rwanda is worth, how the economy has performed over the years, debts and growth projections.
From the above total, includes principal repayments to different international lenders amounting to $493.9m and interest on each of those loans totaling $83.3m.
The Eurobond stands out as the biggest headed to the government, at a time when the economy is struggling due to the COVID-19 pandemic and public debt has spiraled out of control.
From the planning documents which we have, it is clear the authorities are worried about the Eurobond.
“The main risk associated with Rwanda’s debt portfolio is the approaching repayment of the 2023 Eurobond of $400 million, for which the government is currently exploring options that will help to mitigate the refinancing risk of a bullet payment in 2023,” says the Finance Ministry in its debt strategy paper, which is also among the documents we have.
“Going forward, the government’s priority is to remain prudent and effective in its borrowing decisions….. The main focus of the Rwanda borrowing strategy will be concessional terms, while taking into account the currency denomination and the effective cost of funds.”
The money we are going to send outside next year for debt repayment is more than the planned expenditure for this year on education and agriculture combined.