Global rating agency Moody’s has upgraded Rwanda’s outlook to stable from negative, citing its positive assessment that the country’s effective institutions and credible policies have preserved and will continue to anchor the government&#8217;s credit profile in response to shocks.&nbsp;&nbsp;



“Moody&#8217;s expects the government&#8217;s commitment to fiscal consolidation and revenue enhancement to keep its debt burden on a stable to declining path,” the agency said in a statement released on September 8.&nbsp;



Moody’s expects Rwanda’s economic growth to remain strong and support debt sustainability, driven by large infrastructure investments such as the construction of Bugesera International Airport and robust activity in the tourism sector that is likely to continue.&nbsp;



Rwanda’s economy has been on a recovery path. The economy grew by 9.2% year-on-year in the first quarter of 2023, following&nbsp;8.2% growth in 2022. The Composite Index of Economic Activity (CIEA), which signals where the economy is headed, grew by 6.3% in the second quarter of 2023.&nbsp;



Recovery is being driven by services and industry, which grew 13% and 9% in quarter one, respectively. In particular, transport, financial, and telecommunications services saw improved growth with air transport and telecommunications increasing 28% and 43%, respectively during the same period.&nbsp;Manufacturing and mining activities grew 16% and 15%, respectively.&nbsp;



On the other hand, the agriculture sector growth declined by 1% in Q1 2023 due to climate shocks such as floods the country has experienced, which has reduced agriculture output&nbsp;significantly&nbsp;and consequently increased food inflation in the country.&nbsp;



Moody’s, however, expressed confidence in its assessment that growing investments in infrastructure and a thriving tourism sector – tourism receipts increased 56% in the first half of 2023 to $247 million – will offset risks from climate shocks.&nbsp;&nbsp;



According to Moody’s, Rwanda’s&nbsp;effective institutions and credible policies, as demonstrated by the government&#8217;s management of successive shocks, have preserved and will continue to support fiscal and debt metrics and economic growth model, despite downside risks stemming from climate events.&nbsp;&nbsp;



As such, the credit rating agency expects the government&#8217;s fiscal deficit by the end of June 2024 to remain at similar levels to fiscal 2023, at around 6.5% of GDP, and narrowing slightly over the next few fiscal years largely consistent with the International Monetary Fund policy targets.&nbsp;



Moody’s affirms B2 rating&nbsp;&nbsp;



Moody’s also maintained its previous rating position of Rwanda’s creditworthiness, assigning the country B2, which implies that although the country has capacity to meet its financial and debt obligations, risks remain.&nbsp;



“The rating affirmation at B2 reflects Rwanda&#8217;s small and low-income economy that limits its shock absorption capacity, the government&#8217;s still high debt burden for the size of the economy and its income levels, and challenging regional geopolitics that can threaten longer-term development,&#8221; Moody&#8217;s said in a statement.&nbsp;



In Moody&#8217;s rating scale for sovereign debt, B2 falls within the &#8220;highly speculative&#8221; or &#8220;junk&#8221; category.&nbsp;&nbsp;



However, Moody’s said the credit challenges are balanced against Rwanda&#8217;s high growth potential, the country&#8217;s relatively solid institutions and governance compared to peers, and continued strong development partner support that maintains its access to external concessional financing.&nbsp;&nbsp;

Rwanda – Economy – Urban Development in Kigali

Moody’s Upgrades Rwanda’s Outlook To Stable, Economy On Recovery Path   

Credit ratings agency Moody&#8217;s has downgraded South Africa to junk status on day 2 of the country&#8217;s nationwide lockdown. 



President Cyril Ramaphosa&#8217;s economic reform plans have been slowed by the coronavirus pandemic. The downgrade adds salt to injury for South Africa as it currently struggles with a recession it slipped into in early March. 



&#8220;The unprecedented deterioration in the global economic outlook caused by the rapid spread of the coronavirus outbreak will further exacerbate South Africa’s challenges&#8221; said Moody&#8217;s.

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Moody’s Downgrades South Africa To Junk

British prime minister Theresa May survived a no-confidence vote called by her own Conservative Party last week in the battle over Brexit. “We now need to get on with the job of delivering Brexit to the British people and building a better future for this country,” May told reporters after the vote.



As terms of the country’s exit from the European Union are mapped out, Britain’s future is murky. Yet the foundation of its business climate remains attractive, leading the U.K. to the top spot in&nbsp;Forbes’ 13th&nbsp;annual look at the Best Countries for Business, which measures countries that are most hospitable to capital investment. It is the second straight year with the U.K. in the lead.



“The U.K. has a globalized economy that is more open than most across the world in terms of trade, investments, capital flows and, until recently, immigration,” says Moody’s chief economist Mark Zandi.



The U.K. is the only country to land among the top 30 (out of 161 countries ranked) on all 15 metrics&nbsp;Forbes&nbsp;used to rate the countries. <a href="https://www.forbes.com/pictures/5c12b6d54bbe6f0f2aa24c2a/2018-best-countries-for-b/" target="_blank" rel="noreferrer noopener" aria-label=" (opens in a new tab)">Gallery: The Best Countries for Business 201910 imagesView gallery&nbsp;</a>



The Heritage Foundation touts the benefits of Brexit for the U.K. in its annual “<a href="https://www.heritage.org/index/country/unitedkingdom" target="_blank" rel="noreferrer noopener" aria-label=" (opens in a new tab)">Index of Economic Freedom</a>,” which is part of our scoring. “The process of exiting the European Union will afford the government opportunities to correct any remaining structural deficiencies that might be holding back an already high-performing economy,” per the report. “The U.K. has one of the world’s most efficient business and investment environments and will soon be open to expanded global trade relationships.”



Zandi is less optimistic. He thinks it could take multiple generations for the $2.6 billion economy to recover from Brexit. “Under the Theresa May proposal, which is most likely, the U.K.’s global orientation is diminished. It makes investment and trade more challenging,” says Zandi. “The British economic sun is definitely going to shine less bright.”



We gauged the Best Countries for&nbsp;Business&nbsp;by rating nations on 15 different factors, including property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape and investor protection. Other metrics included were workforce, infrastructure, market size, quality of life and risk. Each category was equally weighted.



<a href="https://www.forbes.com/best-countries-for-business/list/" target="_blank" rel="noreferrer noopener" aria-label=" (opens in a new tab)">Click here for the full list of The Best Countries For Business.</a>



The data is based on published reports from Freedom House, Heritage Foundation, Property Rights Alliance, United Nations, Transparency International, World Bank Group, Marsh &amp; McLennan and World Economic Forum (click&nbsp;<a href="https://www.forbes.com/sites/kurtbadenhausen/2018/12/19/best-countries-for-business-2019-behind-the-numbers/" target="_blank" rel="noreferrer noopener" aria-label=" (opens in a new tab)">here</a>&nbsp;for more details on the methodology and the best and worst country on each metric).



Sweden moves up two places to finish second this year. The business climate of the export-oriented economy received high marks for innovation, property rights, risk and low corruption. Stockholm is one of Europe’s leading tech startup hubs. The ratio of national debt to GDP in the Scandinavian country has dropped from 80% in 1995 to 41% last year.



Rounding out the top five countries overall are Hong Kong, Netherlands and New Zealand.



The U.S. fell five spots this year to 17th, a tick ahead of Spain. The world’s biggest economy at $19.5 trillion lost ground on personal, trade and monetary freedoms.



“Instead of embracing the world, we are pushing it away, and that is bad for business,” says Zandi, who highlights the immigration policy as a major deterrent to the U.S. business climate. The problem of getting visas for highly skilled workers is forcing companies to move overseas. The best and brightest are often taking jobs outside the U.S. It is a double whammy if these people are starting new companies. “It puts a stake in the heart of what makes the American economy tick,” says Zandi.



Watchdog organization Freedom House annually rates countries on the “real-world rights and freedoms enjoyed by individuals.” Thirty-three countries get their highest rating. As of this year, the U.S. is not one of them. The U.S. political freedom score took a hit, with the&nbsp;<a href="https://freedomhouse.org/sites/default/files/FH_FITW_Report_2018_Final_SinglePage.pdf" target="_blank" rel="noreferrer noopener">report citi</a>ng&nbsp;“Growing evidence of Russian interference in the 2016 elections, violations of basic ethical standards by the new administration, and a reduction in government transparency.”



African nations populate the worst countries for business with seven of the bottom 10&nbsp;(Haiti is the weakest among non-African countries). These countries typically fare poorly on innovation, trade freedom and investor protection. The Central African Republic ranks last. The conflict-prone nation has a GDP per capita of only $400.

Tag: Moody's

FORBES AFRICA SOCIAL MEDIA

Moody’s Upgrades Rwanda’s Outlook To Stable, Economy On Recovery Path

Moody’s Downgrades South Africa To Junk

The Best Countries For Business 2019: UK On Top, US Down