Rwanda

Strong growth driven by investment and services

In 2024, Rwanda's GDP grew by 8.9%, driven by a rebound in agricultural production (+5%) following a flood-affected 2023 that impacted yields, as well as by strong growth in industry (+10%) and services (+10%).

In 2025, growth is expected to slow slightly as agricultural production stabilises. Economic activity will continue to be primarily driven by the services sector—the main engine of growth due to its weight in the economy (46%)—including business tourism, telecommunications and financial services. Industry will also expand, particularly in construction and mineral refining. Growth is expected to remain at a similar level in 2026, despite a reduction in foreign aid (notably the end of USAID support) and the introduction of new taxes on goods (such as VAT on certain products), which may slightly damp consumption. This momentum would be supported by increased investment, particularly in the Bugesera airport project (in the suburbs of Kigali), launched in 2017 but delayed by the pandemic and planning revisions, with completion expected between 2027 and 2028. Additional investments are also planned for road renovation and the development of the wastewater treatment system.

Inflation, which had reached 14% in 2023, fell to 4.8% in 2024, thanks to a rebound in agricultural production that led to lower prices, and the delayed effects of monetary tightening (with the policy rate raised to 7.5% in 2024). Its recent increase is expected to continue in the second half of 2025 due to the depreciation of the Rwandan franc and higher taxes on fuel and transportation. Nevertheless, inflation should remain within the central bank’s target range of 2%–8% – at around 7% – while the policy rate is expected to be kept at 6.5%. Improved labour market participation (employment rate rising from 53.1% to 56% between the first quarters of 2024 and 2025) prompted a decrease in the unemployment rate to 14.9% in 2024 (-2.3 percentage points year-on-year). However, unemployment remains high among women (17.6%) and youth (18.5%).

Twin deficits between reform efforts and investment constraints

The 2024-2025 fiscal year (from 1 July 2024 to 30 June 2025) recorded a slightly lower-than-expected deficit at 5.5% of GDP, mainly due to tax revenues from goods and services and foreign trade, which offset weaker income tax performance caused by modest wage increases and a short-term contraction in the labour market. For the 2025-2026 fiscal year, operating expenditures are expected to decline by 1.1% of GDP, with the increase in pension spending being more than offset by a reduction in current public administration expenses. Public revenues are projected to grow by USD 475 million despite a drop in foreign aid (USD -110 million compared to initial forecasts). However, major investments in Kigali airport and the national airline RwandAir (equivalent to 3% of GDP), along with an exceptional expenditure of 0.9% of GDP due to project cost overruns, are expected to significantly widen the public deficit for the 2025-2026 fiscal year.

In the medium term and under an agreement with the IMF, Rwanda has committed to a fiscal consolidation path since 2023, the aim of which is to gradually reduce the public deficit to 3% of GDP by 2030 using two main levers: the reform of pension contributions and a gradual overhaul of the tax system. Since 1 January 2025, the pension contribution rate has been doubled, increasing from 6% to 12% of gross salary and shared equally between employers and employees. This rate will subsequently increase by two points per year from 2027 to reach 20% in 2030 to ensure the sustainability of the Rwandan social security system. At the same time, an ambitious tax reform will be gradually implemented between 2025 and 2030. It aims to broaden the tax base by improving the taxation of undeclared activities, gradually remove certain VAT exemptions (notably on telephones, hybrid vehicles, beer and transport services), streamline income tax incentives to strengthen the attractiveness of private investment, and introduce VAT on fossil fuels, with a view to combating pollution and greenhouse gas emissions. Public debt, around 80% of GDP, is expected to continue growing in 2026, again due to investments. Approximately 80% of Rwanda's public or publicly guaranteed debt is owed to external creditors, three-quarters of which are multilateral creditors, the majority of which comes from highly concessional financing from the World Bank.

Externally, the current account is structurally in heavy deficit and is expected to continue to widen in 2025 and 2026. Exports will be supported by agricultural production, the development of mineral refining, tourism, and the ongoing adjustment of the real effective exchange rate. However, imports related to the Kigali airport project, food and energy dependence, as well as spending to make infrastructure more resilient to climate events will keep the trade deficit at the same level as in 2024. Higher interest payments on commercial loans and reduced international aid will also increase pressures on the current account. This deficit will be financed by improvements in the financial account, notably through increased FDI, including from Qatar, which is co-financing the construction of the airport.

Internal political stability and regional tensions

President of the country since 2000, Paul Kagame was unsurprisingly re-elected on 15 July 2024, with over 99% of the vote. Regularly accused of silencing dissent – opponents are frequently arrested – he is also credited with the return to civil peace, political stability and significant poverty reduction (43% in 2023 compared to 75% in 2000). Regionally, Rwanda pursues an active foreign policy, marked by multiple military interventions, combining security, diplomatic, and economic issues. Kigali has been involved in the Kivu conflict in eastern DRC since 2012, through its support for the M23, an armed group claiming to be the defender of Congolese Tutsis, and through the presence of its troops, which has been attested to by the UN. The intervention is based first on security motivations, the aim being to neutralise the FDLR, an armed Hutu group that fled Rwanda after the genocide against the Tutsis in 1994 to take refuge in eastern Zaire. Second, it addresses the rivalry with Uganda and Burundi, led by Hutus, who also have a military presence in the area. Last, it aims to ensure control of strategic minerals such as coltan. The peace agreement signed with the DRC in Washington in June 2025 under US pressure provides for a withdrawal of Rwandan troops and trilateral mining cooperation (DRC-Rwanda-US), but its implementation remains uncertain. At the same time, additional negotiations were held in Doha between the DRC and the M23, under Qatari mediation. Talks resulted in a declaration of intent in July 2025 that included a commitment to a permanent ceasefire and formal negotiations towards a comprehensive peace agreement to be signed no later than 8 August 2025, and a roadmap for the restoration of state authority in eastern DRC.

At the same time, Rwanda is expanding its influence in Africa through multilateral and bilateral military engagements which are consistent with projecting power and ensuring diplomatic gains. Rwanda provides military support to the Central African Republic government, both through MINUSCA (UN peacekeeping mission) and bilateral agreements, in exchange for concessions in the mining and agricultural sectors. In Mozambique, Rwandan troops are on the front lines fighting against the Islamist insurgency in Cabo Delgado, thereby indirectly securing international gas investments. This earns it financial support from the European Union. Last, Rwanda participates in the UN mission (UNMISS) in South Sudan.

Last updated: July 2025