Rwanda has recorded a 12.4 percent drop in Growth Domestic Product (GDP) in the second quarter from July to September compared to the same period last year.
This has been attributed mainly to the impact of the Covid-19 pandemic, which led to a total lockdown in the country in March and only a partial reopening from May 4. Many businesses, including bars and entertainment facilities, remain closed as the country fights to stop the spread of the novel coronavirus.
Presenting the Status of the Economy and the Budget in First Quarter of 2020/2021 at Parliament on Monday, Minister of Finance and Economic Planning Uzziel Ndagijimana said the decline was mainly due to a drop in revenues in the transport, trade, education, construction, exports, hotels and restaurants, and agriculture sectors.
The agriculture sector that usually contributes more than over 30 percent in GDP, dropped by 2 percent in the Q2 of 2020 compared to the same quarter in 2019, “due to impact of climate related disasters of 2019 which affected Season A 2020,” he said.
However, information and communication increased by 33 percent in this quarter.
“Almost all export categories showed a decline resulting in a 21.4 percent and 15.1 percent decrease in value and volume respectively of export,” the minister said.
The country is, however, managing well the crisis, Mr Ndagijimana said.
“Total domestic revenue collections for the July-Sept period amounted to 465.5 billion FRW ($468.6 million) and exceeded the estimated amount for the period by 52.5 billion FRW, around $52.8 million (12.7 percent),” he said. “Both tax and non-tax revenue components contributed to these excess collections”.
He noted that at the end of September 2020, provisional data indicates that the government had spent 885.9 billion FRW ($891.8 million), which was 1.6 billion FRW ($1.6million) lower than the estimated amount of 887.6 billion FRW ($893.5 million).
Due to the Coronavirus Pandemic, Rwanda moved from Lower risk of debt status to medium, Minister Ndagijimana said.
Dr. Frank Habineza, Member of the parliament, raised concern about the country’s debt portfolio and its ability to remain stable.
“We are receiving a lot of loans. I’m worried if the country will be able to repay. Most of the debts are supposed to be repaid in the near future, five to six years ahead, which could be a burden to the country,” he said.
But Minister Ndagijimana assured Parliament that, “The country’s debt is sustainable despite the increase…We have adequate measures to track debts procedures; we have no worries of defaulting.”
As of the end of June 2020, the total public debt in nominal terms were at 63 percent of GDP, of which 49 percent was external and 13.5 percent domestic. It is projected to reach 66 percent of GDP by the end of December, of which 52 percent will be external debt and 14.5 percent domestic.