By Patrick Jaramogi
The International Monetary Fund (IMF) has praised Bank of Uganda’s on the monetary policy stance, saying it brought down inflation to a four-year low.
This set the conditions for some additional monetary easing, provided the inflation expectations are anchored and the fiscal risks are contained, according to the IMF.
It said in a press release that Uganda’s performance under the Policy Support Instrument (PSI) remains satisfactory.
The IMF’s executive board completed the third review of Uganda’s economic performance under the programme supported by the PSI. The PSI for Uganda was approved by the executive board on June 28, 2013.
It said the country’s real Gross Domestic Product (GDP) growth was lower than expected at the time of the second PSI review in 2013/14. It attributed it to under-execution of externally-financed public investment and adverse impact on exports of slower growth in main trading partners. However, IMF added that the country’s growth is projected to increase in the financial year 2014/15, aided by scaled-up public investment and a recovery in private demand as accessing bank credit increases.
It pointed out that lack of tax compliance is resulting in lower-than-expected revenue. It also said revenues would be greatly improved if Uganda Revenue Authority strictly enforces the recent elimination of the tax exemptions coupled enhanced compliance from taxpayers.
IMF board praises BOU''s monetary policy stance