Economists react to Suruma’s strategy

Feb 18, 2005

THE business community has welcomed new finance minister Ezra Suruma’s call for a radical shift in Uganda’s economic strategy, but said some suggestions are not practical.

By Steven Odeu
THE business community has welcomed new finance minister Ezra Suruma’s call for a radical shift in Uganda’s economic strategy, but said some suggestions are not practical.
In a statement published in the media yesterday, Dr. Suruma proposed a return to the interventionist model of macro-economic management.
“This approach is very interesting. The intentions are good, but some are not practical in Uganda. Suruma is very good in macro-economics, but economics is not what runs a country. It is practical management,” a senior government economist said on Friday.
Suruma described the current strategy as, “Laissez faire model based on the belief that the Government should limit itself to ensuring a stable economic framework and providing public goods like feeder roads, while leaving the peasants to fend for themselves by reacting to market incentives. We have been following this model and the productivity figures remain at the bottom of the world scale.”
“I agree with him. There is need to guide our people and support them to get started. A stable framework is necessary, but we should not limit ourselves. We need to develop our ideas and if it means giving subsidies to get our people started, we should do it and avoid operating like we are in the modern world,” an economist at the the agriculture ministry said.
On Suruma’s suggestion that the Bank of Uganda should work towards an exchange rate consistent with maximisation of exports, those interviewed said the minister is trying to decide an exchange rate.
“Currency depreciation is as bad as currency appreciation, but deciding or fixing the rate would not be the best option. Having the exchange rate at sh1,500 per dollar would be good for our economy, but it should not be short circuiting,” said the economist.
Richard Byarugaba, the President of the Uganda Institute of Bankers, said, “I find his suggestion very interesting and good. We have to let market forces operate when it comes to the exchange rate.”
Economists also welcomed Suruma’s suggestion of revitalising cooperative societies, but said it should be limited to giving them a push to start, not running them.
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