Rwanda is a country known for its resilience and is now fighting for its economic self-reliance. This is a thesis submitted for master´s degree of Economics (international trade and finance). It analyzes the effect of foreign aid on trade balance in Rwanda. The study used Vector auto-regressive econometric model. The results showed a causal relationship between foreign aid and trade balance. the study proposes possible measures to overcome these challenges.Cyesa, Gallican Cyesa Gallican is an experienced consultant/Researcher. He has a vast experience in both public and private sector. He developed various policies, strategies and implemented various programmes.