Rwanda aspires to reach Middle Income Country (MIC) status by 2035 and High-Income Country (HIC) status by 2050. This aspiration will be carried out through a series of seven-year National Strategies for Transformation (NST1), underpinned by detailed sectoral strategies that are aimed toward achievement of the Sustainable Development Goals.
The NST1 came after the implementation of two, five-year Economic Development and Poverty Reduction Strategies—EDPRS (2008-12) and EDPRS-2 (2013-18), under which Rwanda experienced robust economic and social performances. Growth averaged 7.2 % over the decade to 2019 , while per capita growth domestic product (GDP) grew at 5% annually. The lockdown and social distancing measures, which were critical to control the COVID-19 pandemic, sharply curtailed economic activities in 2020. The government expects GDP to drop by 0.2% in 2020, compared to a projected expansion of 8% before the COVID-19 outbreak.
Rwanda’s public-sector led development model has shown limitations, as public debt has increased significantly in recent years. Rwanda’s growth model has relied heavily on large public investments (12.3% of gross domestic product (GDP) in 2019) leading to substantial fiscal deficits financed mainly through external borrowing. Consequently, the debt-to-GDP ratio rose to 56.7% in 2019 (from 19.4% in 2010). External financing through grants, concessional and non-concessional borrowing played an important role in financing public investments. Going forward, the private sector will play a bigger role in helping to ensure economic growth. Low domestic savings, skills, and the high cost of energy are some of the major constraints to private investment. Stronger dynamism in the private sector will help to sustain high investment rate and accelerate the growth. Promoting domestic savings is viewed as critical. Inclusive growth also remains a critical challenge.
