Rwanda’s Finance Minister, Yusuf Murangwa, has told the nation’s parliament that the country’s economy will grow at a slower pace in 2025 compared to last year. Presenting a draft budget for the 2025/2026 fiscal year, Murangwa said the economy is projected to grow by 7.1% this year, down from the impressive 8.9% recorded in 2024.
Murangwa, who was appointed earlier this year, did not state clearly why the country’s growth rate is expected to dip. However, the government remains optimistic, projecting growth to rise again to 7.5% in 2026, with slight adjustments in subsequent years—7.4% in 2027 and 7.0% in 2028.
The Rwandan economy, which is heavily reliant on agriculture, tourism, and manufacturing, has enjoyed strong growth in recent years. The 2024 performance was largely driven by a recovery in tourism and manufacturing, with increased agricultural productivity following good weather conditions. But with no clear explanation from the finance minister for the dip in 2025, analysts say it could be linked to global economic headwinds, unpredictable weather, or challenges in the international aid and investment space.
In spite of the projected slowdown, the government is planning to spend more in the 2025/2026 fiscal year. The total proposed spending stands at 7.03 trillion Rwandan francs, equivalent to about $5.01 billion, marking a nearly 21% increase from the 5.82 trillion francs budgeted for the current fiscal year (2024/25).
Murangwa explained that the government will finance this larger budget through several sources. A significant part—4.11 trillion francs—will come from domestic revenues, showing a push to rely more on internal sources like taxes and duties. The remaining funds will be raised through external support: 2.15 trillion francs from loans and 585.2 billion francs from grants.
The finance minister did not go into detail about the nature of the loans or which international institutions would be involved. Rwanda, like many African countries, has over the years received financing support from the World Bank, African Development Bank, IMF, and other bilateral and multilateral donors.
The final budget for the 2025/26 fiscal year is expected to be presented and passed by parliament in June. The fiscal year in Rwanda runs from July to June.
This increase in spending comes at a time when many African governments are being advised to be cautious with borrowing due to rising debt levels across the continent. However, Rwanda has earned praise in the past for its disciplined fiscal management and relatively stable political environment under President Paul Kagame.
The government is expected to prioritize key sectors such as infrastructure, education, health, and agriculture. More clarity will be available once the detailed budget is tabled in June.
For now, Rwandans will be watching closely to see how the government plans to balance the slower economic growth rate with the increased government spending, and whether the increased borrowing will bring long-term benefits or add pressure to national debt.
