Rwanda receives 460 mln euros from EU for energy, agriculture

KIGALI (Reuters) - Rwanda has received 460 million euros ($592.20 million) from the European Union to improve power generation and agriculture, in a country that heavily relies on donors to fund its development and annual budget. The central African state's economy has suffered from cuts in budgetary support by donors after United Nations monitors accused it in 2012 of backing rebels in the neighbouring Democratic Republic of Congo. Although Rwanda rejected the accusations, economic growth in the landlocked coffee and tea producer slipped to 4.6 percent last year from 7.3 percent in 2012 after donors cut aid, with agriculture and energy slowing down the economy. Rwanda's finance ministry said on Friday the EU would spend 200 million euros in power generation and distribution, while reducing the use of diesel and biomass as energy sources. Another 200 million euros will go to the agriculture sector, while the rest will be spent on improving governance. The World Bank said in a report released on Aug. 28 that it had cut its 2014 growth forecast for Rwanda, blaming delayed spending on energy and transport and a slowdown of credit growth to the private sector. Aid makes up about 40 percent of the budget in the country of 11 million people, which plans to spend 1.75 trillion Rwandan francs ($2.58 billion) in the 2014/15(July-June) fiscal year. Rwanda's growth rate averaged 8.2 percent from 2006 to 2012 with investors hailing the country for its solid fundamentals, including low debt and inflation. It sold $400 million in a debut Eurobond in April last year. The country expects its economic growth to pick up to 7 percent in 2016 from 6.7 percent in 2015.