{{Rwanda’s economy should grow by 7.6% this year from an estimated 7.7% in 2012, but lower aid disbursements and a tough global economic environment could erode this, the International Monetary Fund (IMF) said.}}
Donors froze aid worth $240m in the second half of 2012 — roughly 11% of the country’s budget, the government said in December.
The aid was suspended over Rwanda’s alleged support for rebels in the Democratic Republic of Congo, an accusation Rwanda has repeatedly rejected.
“Growth is expected to be sustained at 7.6% in 2013, driven by an expansion in services and construction, and to stabilise at around 7% over the medium term,” the IMF said in a statement on Tuesday.
“Risks to the outlook arise mainly from possible cutbacks in aid and a more challenging global environment. Staff estimates indicate that a prolonged delay in the delivery of budget support could lower growth in 2013 by 1.5% points and possibly more, depending on the magnitude of second round effects,” the IMF said.
Rwanda’s central bank said in February it expected economic growth of 7.1% this year, from a previous forecast of 8%, while in December the then finance minister John Rwangombwa said economic growth could slow to as low as 6% this year as a result of the aid freeze.
The IMF expected inflation to converge towards the government’s medium term target of 5%.
Urban inflation slowed to 4.79% in February from 5.67% a month earlier.
Reuters
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