By David Himbara
Rwanda has received from the International Monetary Fund (IMF) a new loan of US$319 million under the new instrument of the Resilience and Sustainability Facility (RSF). This is a new lending toolkit designed to help poor countries, small states, and vulnerable middle-income countries to address climate change and pandemic challenges.
So what are the terms of the RSF US$319 million loan?
According to the IMF, the maturity, repayment, and interest rates of RSF loans are as follows:
1) RSF arrangements have a 20-year maturity and a 10 ½ -year grace period during which no principal is repaid.
2) The interest rates differ according to income levels of the recipient countries. Poor countries such as Rwanda benefit from more concessional terms.
How does the new loan affect Rwanda’s indebtedness?
According to the Ministry of Finance and Economic Planning, in 2021, Rwanda’s public and publicly guaranteed debt was 73.3 percent of GDP or US$7.4 billion. Comparatively, Rwanda’s public and publicly guaranteed debt was 35.4 percent of GDP in 2015 against 19.5 percent of GDP in 2010. In other words, Rwanda accumulated debt sharply in the past decade. The new US$319 million loan from the IMF will obviously add to Rwanda’s debt of US$7.4 billion. Stay tuned.