Uzziel Ndagijimana, Minister of Finance and Economic Planning, has said that Rwanda is on track with meeting its debt obligations to creditors.

One of the strategies that the country put in place is to target concessional loans that provide substantial grace periods within long term payment periods.

Concessional loans is credit that is extended on terms substantially more generous than market loans usually by international development financiers, such as the World Bank, African Development Bank, among others.

The loans have significantly low-interest rates and long grace periods with the possibility of revising terms further.

"Our medium term strategy is to gradually reduce the debt to GDP ratio,” said the minister during a post budget reading press conference on June 30.

The recently approved national budget of Rwf4.6 trillion for the fiscal year 2022/2023 that starts July 1, represents an increase of Rwf217.8 billion, or 4.9 percent from the Rwf4.4 Trillion revised budget of 2021/22 fiscal year.

Of this, Rwf2.6 Trillion (57 percent of the entire budget) is from domestic sourcing while 23.5 percent (approximately Rwf1.09 Trillion) is from external loans and 19.5 percent (Rwf906.9 billion) from grants.

Despite the fact that the country is still grappling with Covid-19 impacts, spill overs from Russia-Ukraine war impact, as well as inflation, the budget’s external borrowings continue to gradually decline.

Rwanda aims to reduce fiscal deficit-the difference between locally mobilised resources and the budget needs. This is the gap that justifies borrowing.

Within the approach of concessional borrowings, Ndagijimana said major lenders include the World Bank, the African Development Bank, European Investment Bank, French Development Agency, and other funds.

The funds are allocated for ongoing investment projects with returns as well as new projects within this 2022/23 fiscal year.