{"id":39807,"date":"2019-08-07T15:59:03","date_gmt":"2019-08-07T15:59:03","guid":{"rendered":"https:\/\/new.igihe.com\/rwanda-dismisses-as-false-reporting-on-its-debt\/"},"modified":"2019-08-07T15:58:53","modified_gmt":"2019-08-07T15:58:53","slug":"rwanda-dismisses-as-false-reporting-on-its-debt","status":"publish","type":"post","link":"https:\/\/new.igihe.com\/english\/rwanda-dismisses-as-false-reporting-on-its-debt\/","title":{"rendered":"Rwanda dismisses as false reporting on its debt with China"},"content":{"rendered":"

On August 3, 2019, Stephen Paduano published an article in The Atlantic; \u201cChina\u2019s Investments in Rwanda Raise Familiar Questions About Debt\u201d, in which he describes Chinese investments in Africa as a \u2018Chinese debt trap\u2019.<\/p>\n

He wrote that African nations increasingly welcomed the funds from China despite concerns that the costs are outweighing the benefits.<\/p>\n

The journalist reflected on countries like Djibouti saying that the debt to GDP ratio it owes China stands at 77 percent raising fears that China will take over one of Djibouti\u2019s ports.<\/p>\n

Among others, Paduano said that Rwanda\u2019s debt-to-GDP ratio is 53 percent, that Rwanda will spend more on paying interest\u2014and have less to spend on basic services for its people.<\/p>\n

The Ministry of Finance and Economic Planning has released a statement dismissing the reports of Paduano as false and misleading. <\/p>\n

{{Full statement}}<\/p>\n

Factual correction on an article published in The Atlantic<\/p>\n

On August 3, 2019, Stephen Paduano published an article in The Atlantic (\u201cChina\u2019s Investments in Rwanda Raise Familiar Questions About Debt\u201d) in which he describes Chinese investments in Africa as a \u2018Chinese debt trap\u2019.<\/p>\n

However, the content related to Rwanda requires factual correction on two points: Rwanda\u2019s debt sustainability and the level of Chinese investment in Rwanda.<\/p>\n

1. Rwanda\u2019s debt sustainability<\/p>\n

The author cites a Debt-to-GDP Ratio of 53% to claim that Rwanda\u2019s debt is too high and will \u201chave less to spend on basic services for its people\u201d as a result. However, that debt indicator is misleading, and the associated conclusion therefore unfounded. <\/p>\n

The Debt-to-GDP Ratio of 53% is the total debt stock to GDP ratio, which is indeed the current total public and publicly guaranteed debt stock for Rwanda at the end of 2018.<\/p>\n

However, Rwanda\u2019s debt is mainly concessional (80% of its external debts), with long maturities up to 40 years and grace periods up to 10 years. Therefore, the indicator used by the IMF and the World Bank to measure debt sustainability is the Present Value of Debt-to-GDP Ratio, which is 31.9% currently, well below the threshold of 55% for debt sustainability as per IMF and World Bank standards.<\/p>\n

It is also incorrect to state that Rwanda has a debt service burden because its Debt Service to Exports Ratio and Debt Service to Revenue Ratio are well below the thresholds, indicated in the table below.<\/p>\n

The most recent joint IMF-World Bank Debt Sustainability Analysis (DSA), dated 11 June 2019, rates Rwanda\u2019s overall risk of debt distress as \u2018low\u2019 .<\/p>\n

Similarly, the July 2019 World Bank Africa Country Policy and Institutional Assessment (CPIA), subtitled \u201cStrengthening Debt Management Capacity\u201d, ranks Rwanda at the top of the regional and global ranking, as it was in 2017.<\/p>\n

Rwanda also enjoys one of the highest sovereign credit ratings in Africa from the three major rating agencies, with a stable or positive outlook.<\/p>\n

Rwanda\u2019s debt strategy is to maintain its current low level of debt, which is projected to be at 39.8% in 2024.<\/p>\n

{{Indicators 2019 Threshold}}<\/p>\n

Present Value of Debt to GDP 31.9% 55%<\/p>\n

Present Value of Debt to exports 150.6% 240%<\/p>\n

Present Value of Debt Service to Exports 9.0% 21%<\/p>\n

Present Value of Debt Service to Revenues 10.5% 23%<\/p>\n

{{2. Chinese investment in Rwanda}}<\/p>\n

Rwanda enjoys good cooperation with China. However, the size of Chinese investment in Rwanda cited in the article is inaccurate. <\/p>\n

It is not true that \u201870% of Rwandan roads have been financed and built by Chinese\u2019. <\/p>\n

Rwandan roads have been financed from diverse sources, the major ones being the World Bank, the African Development Bank, the Gulf, China, and Japan. Chinese loans to Rwanda represent less than 5% of Rwanda\u2019s total debt.<\/p>\n

\"The<\/figure>\n","protected":false},"excerpt":{"rendered":"

The Government of Rwanda has dismissed reports from a foreign journalist claiming that Rwanda\u2019s debt to the Republic of China incapacitates government capacities to offer basic services for citizens. <\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[75],"byline":[170],"hashtag":[],"class_list":["post-39807","post","type-post","status-publish","format-standard","hentry","category-news","tag-homenews","byline-igihe"],"bylines":[{"id":170,"name":"IGIHE","slug":"igihe","description":"","image":{"id":0,"url":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&f=y&r=g","alt":"Default avatar","title":"Default avatar","caption":"","mime_type":"image\/jpeg","sizes":[]},"user_id":8}],"contributors":[{"id":170,"name":"IGIHE","slug":"igihe","description":"","image":{"id":0,"url":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&f=y&r=g","alt":"Default avatar","title":"Default avatar","caption":"","mime_type":"image\/jpeg","sizes":[]},"user_id":8}],"featured_image":null,"_links":{"self":[{"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/posts\/39807","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/comments?post=39807"}],"version-history":[{"count":0,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/posts\/39807\/revisions"}],"wp:attachment":[{"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/media?parent=39807"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/categories?post=39807"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/tags?post=39807"},{"taxonomy":"byline","embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/byline?post=39807"},{"taxonomy":"hashtag","embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/hashtag?post=39807"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}