S&P Global Ratings changed its outlook on Rwanda to positive from stable and affirmed the long- and short-term foreign and local currency sovereign credit rating at B/B.

The rating agency said it could upgrade Rwanda's ratings over the next year if the country's external adjustment policies reduce its external financing needs and support foreign exchange reserves beyond S&P's current expectations.

"This may happen if government policies deliver higher exports of nontraditional goods, including gemstones, textiles, and agro-processed products, while reducing imports through increased domestic production of goods such as cement," S&P said.

Rwanda's external adjustment policies, which are supported by an 18-month International Monetary Fund standby credit facility of $204 million, helped reduce the country's current account deficit in 2017. S&P expects the current account balance to gradually decline from 2019.

The debt watcher also expects upcoming pipeline of investment projects, along with higher exports and consumption, to support medium-term growth prospects.

"The strong growth in exports, despite weaker investment activity, supported real GDP growth of 6.1% in 2017, almost one percentage point higher than our previous assumption," the agency said.

S&P noted that it could also take a positive rating action if Rwanda turns in a stronger economic performance than the debt watcher projects.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.