IMF says Uganda's economic performance is satisfactory

By Samuel Sanya & David Mugabe

The International Monetary Fund (IMF) has hailed the Government’s commitment to infrastructure development, the effective control of inflation and the start of the treasury single account to manage the Government payroll.

The IMF executive board has just completed the second review of Uganda’s economic performance under a Policy Support Instrument that was approved on June 28, 2013 and rated Uganda’s economic performance as ‘satisfactory’.

“Uganda’s recent economic performance has been broadly satisfactory with robust growth, low inflation, and strong international reserves,” David Lipton, the IMF deputy managing director and acting chairman, said following a board discussion.

“However, the Government net domestic financing has expanded beyond the programme ceiling and private sector credit growth has remained constrained,” he added.

The IMF notes that the Government must resist spending pressures, limit domestic borrowing to programmed levels and curb the use of supplementary budgets. This will allow implementation of important infrastructure projects and social programmes, IMF argued.

“Significant progress has been achieved on institutional reform. The authorities have implemented sound public financial
management reforms and adopted a new methodology to manage unpaid bills,” IMF said.

They noted that completing the introduction of the treasury single account, making efficient use of the upgraded payments
and payroll systems, and adopting the Public Financial Management Bill promptly are paramount steps to further improve
governance, strengthen the budget process, and ensure sound oil revenue management.

Reacting to the IMF rating, Kelvin Kizito Kiyingi, the acting director of the communications department at the Bank of
Uganda, said the positive rating will further foster confidence in the management of our economy.

Jim Mugunga, the finance ministry publicist said: “We are happy about the report and it is consistent with the deliberate reforms that we are implementing together with the development partners.”

On the slowdown in private sector credit growth and revenue shortfalls, he noted that the slowdown is associated a lot more with the impact of the regional social-political issues rather than commercial ones.

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