In 2013, Rwanda’s economy struggled to keep up with the pace experienced in 2012 following the aid cuts by development partners the previous year, although macroeconomic stability was maintained.

According to the World Bank report on the latest assessment of economic performance of 2013, the growth slowed to 6.6 per cent against the projected 7.5 per cent.

READ: IMF predicts slower economic growth for Rwanda

Rwanda’s budget is financed by aid donors to the tune of 40 per cent, implying that any interruptions in aid flow significantly affects the economy.

The aid cuts were motivated by a UN report that accused the government of supporting the now defunct eastern Democratic Republic of Congo rebels M23, which Rwanda vehemently denied.

The World Bank is however optimistic that the economy will pick up in 2014 given the sound macro-economic stability that the country has demonstrated.

As a result of the slowed economy, there was increased domestic borrowing by the government and tightened monetary conditions with the availability of financial resources, mainly for households and private business, reduced.

Together with the lower level of public capital spending, the credit slowdown led to contraction of domestic demand, affecting mostly the services sector, says the report.

Growth in the services sector sharply decelerated to 4.2 per cent in the first half of 2013 from 11.4 per cent in the second half of 2012.