Rwanda has successfully repaid its $400 million Eurobond despite pressure on the country’s coffers that have come under intense pressure due to ongoing global shocks linked to the prolonged impact of the Covid-19 pandemic, the war in Ukraine and the appreciation of the US dollar.

The EastAfrican has learned that the full payment, which was due this week, was successfully made.

Officials from Rwanda’s Ministry of Finance and Economic Planning say the repayment was made possible partly due to the availability of financing from the International Monetary Fund (IMF) that allowed the government to make savings.

"The government has set aside $63 million as part of the International Monetary Fund's Special Drawing Rights (SDR) allocation that it received in 2021 as support to fight against the impact of Covid-19 on the economy,” the finance ministry told The EastAfrican.

“This foresight and proactive measure by the government have significantly reduced the risk of default and allowed a successful repayment of the remaining 15.1 percent of the 2013 Eurobond," the ministry added.

However, Rwanda successfully managed to reduce its debt burden during the pandemic when it took advantage of the low-interest rate environment and issued the second $620 million Eurobond, using part of its proceeds to repay part of the $400 million.

The 10-year Eurobond ($620 million) issued in April 2021 attracted a coupon rate of 5.5 percent, lower than the 2013 rate of 6.625 percent.

The lower yield led to a reduction in its annual interest payments over the next 10 years, which has helped to make its debt sustainable.

While the government has aggressively borrowed in recent years to finance economic recovery and development projects with public and publicly guaranteed debt rising sharply to 78.3 percent of GDP in 2021 up from a pre-pandemic figure of 60.7 percent of GDP in 2019.

However, approximately 80 percent of this debt is concessional with development finance institutions with low-interest rates and long maturity.