Rwanda sees GDP growth hit if aid doesn't restart

Fri Nov 2, 2012 3:03pm GMT

By Jenny Clover

KIGALI (Reuters) - Rwanda's economic growth could be hit if donors fail to reinstate aid payments, with the economy only able to withstand the stoppage until the end of the year, the country's finance minister said on Friday.

The United States, Sweden and the Netherlands have all suspended some aid to Rwanda, which relies on donors for about 40 percent of its budget, over a U.N. report accusing the central African nation's defence minister of commanding rebels in neighbouring Democratic Republic of Congo.

In September, the European Union froze further budgetary support to Rwanda. .

Another donor, Britain unblocked part of its cash in September, praising Rwanda for constructively pursuing peace.

John Rwangombwa, minister for finance and economic planning, told Reuters in an interview that he was at present unconcerned about the impact of the aid suspensions, but that if they persisted into next year, they could start hurting the economy.

"We think by the end of this year we should have resolved these issues of the donors. If it doesn't go beyond December it won't affect us, if it's prolonged that's when we will have effects," he said.

"There's the possibility of slowing down our economic growth because the government is part of the major players in this economy. It depends on the magnitude of the prolonged delay."

The minister did not quantify the likely fall in growth.   Continued...

Rwanda's President Paul Kagame addresses the forum "Africa: Reshaping Partnerships for Sustainable Growth" at a pre-summit business forum ahead of the Commonwealth Heads of Government meeting (CHOGM) in Perth October 26, 2011. REUTERS/ Daniel Munoz
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