President Kagame hadn’t had a chance to admire the newly acquired Airbus A330-200. This is because when the USD229 million aircraft touched down at Kigali international airport on September 28, Kagame was on his lecture tours across America.
A second Airbus, an A330-300, is expected in November – this one costs USD253 million. The total bill for these flying machines is over USD400 million. But how is Kagame financing all this?
Among institutions alarmed by Kagame’s shopping spree is the IMF. In its June 2016 Report,* the IMF highlighted several major risks in Rwanda:
* External debt keeps rising, and therefore “the scope for expanding public external debt is limited.”
* Trade deficit “is expected to deteriorate further in 2016 on account of a large one-off purchase of aircraft for RwandAir, [and] weaker mineral exports…”
* Foreign reserves keep falling; in 2015 reserves “were below the level deemed optimal for Rwanda, given its low export base and vulnerability to commodity price shocks…Without additional financial support to cushion the blow from the mineral price shock…in 2016 and 2017 reserves will fall further below the 4-5 months of imports cover deemed adequate.”
These crises led the IMF to step in and lend Rwanda USD204 million as “standby credit” for addressing some of these challenges.
The problem is – does Kagame listen? And if he does not listen, will his airline – aka “fly the dream of Africa” become Kagame’s nightmare?
* See IMF, “RWANDA: FIFTH REVIEW UNDER THE POLICY SUPPORT INSTRUMENT AND REQUEST FOR EXTENSION, AND REQUEST FOR AN ARRANGEMENT UNDER THE STANDBY CREDIT FACILITY,”http://www.imf.org/external/pubs/ft/scr/2016/cr16153.pdf