S&P Global Ratings has warned that the escalating conflict between Rwanda and the Democratic Republic of Congo (DRC) could harm both nations' credit ratings due to the economic strain of war. The agency highlighted that Rwanda risks losing foreign aid, a key part of its budget, while the DRC may face financial pressure from rising defence spending.
S&P noted that regional security tensions have long posed risks to both countries, but the recent advance of M23 rebels toward Goma has heightened these concerns. Continued fighting could widen Congo’s budget deficit and deter foreign investment. For Rwanda, growing international criticism over its alleged involvement in the conflict could lead to cuts in concessional loans and donor funding, which are vital for its economy.
Rwanda’s economic growth relies heavily on public investment, largely funded by concessional financing and donor support. S&P pointed out that Rwanda’s growth slowed sharply after aid cuts following the 2012 M23 rebellion, dropping from 8.6% in 2012 to 4.8% in 2013. A similar reduction in aid now could destabilize its economy further.
Rwanda has a $620 million Eurobond maturing in 2031, and prolonged conflict could weaken its currency and increase debt servicing costs. Rwanda denies supporting M23 rebels or having troops in eastern Congo. S&P’s warning underscores the potential economic fallout from the ongoing tensions.
