Rwanda likely to miss growth target of 6.6%

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Kigali - Rwanda is likely to miss its 2013 economic growth forecast of 6.6 percent after the performance of the service sector fell short of expectations due to the effects of aid cuts the previous year.

The country's central bank said in a document released on Wednesday the outturn for the year was likely to fall below 6 percent.

The landlocked east African nation of about 10 million people suffered from cuts in budgetary support by donors in 2012 after it was accused by the United Nations of backing rebels in the neighbouring Democratic Republic of Congo.

Those cuts caused the government to curb its spending, limiting average growth for the services sector in the first three quarters to 4.6 percent, down from 12.2 percent in all of 2012.

“This moderate performance was due to cuts in government expenditures and slowdown in credit distribution to the private sector,” the central bank said.

The industrial sector held its own during the period, growing by an average of 11.6 percent in the first three quarters, the central bank said, without giving the comparative growth rate for the previous period.

All aid was resumed in 2013 in some form at least, with some aid that was direct budgetary support going into programme support. Growth forecasts for 2014 are likely due next month.

Inflation was likely to be stable at around 5 percent this year on the back of projected good production of food and stable oil prices in global markets, the central bank said.

The rate fell to 2.4 percent in the year to January. - Reuters

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