Kagame’s Debt — Is it Building Productive Capacity or Delusional Fantasies?

David Himbara The Author of Kagame’s Economic Mirage

Kagame's Ministry of Finance has debt data that goes only up to 2014. In 2014, external debt was US$1.7 billion, while domestic debt was US$562 million. Total public debt in 2014 was in other words US$2.3 billion.

For the year 2015, the Joint Staff Rwanda Debt Sustainability Analysis (DSA) by the IMF and the World Bank reported Rwanda's external debt to be US$2.1 billion.

I do not have the figure for domestic debt for 2015.

For 2016, we are aware of the African Development Bank loan of US$163 million, World Bank loan of US$90 million, European Union loan of US$20 million, and IMF loan of US$204 million. That is a total of US$477 million loans borrowed in 2016.

I do not have the domestic debt for 2016.

We therefore know for sure that Rwanda debt in July 2016 is US$2.5 billion - excluding domestic borrowing for 2015, and 2016. We nonetheless estimate Rwanda's current total debt to be US$3 billion that would include domestic borrowing for 2015 and 2016 as well as foreign loans we have not capture.

Let us be very clear. Debt in itself is not necessarily a bad thing. True, public debt means a government is spending more than domestic tax revenues combined aid grants in the case of Rwanda. But if debt is not building some kind of productive capacity and is instead building white elephant projects, then we are in trouble.

For those friends who asked me to write this, address this question: is Kagame's US$3 billion debt building productive capacity to render Rwanda prosperous or he is lost in delusional fantasy land?

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David Himbara