Economic growth to fall to 5.5% â€" IMF
Apr 13, 2009
UGANDA’S growth rate will slow down to 5.5% in 2009/10 due to the global financial crisis, the International Monetary Fund (IMF) has predicted. Martine Guerguil, the chief of the IMF mission to Uganda, said the projected slowdown is from 8.5% for the l
By Sylvia Juuko
UGANDA’S growth rate will slow down to 5.5% in 2009/10 due to the global financial crisis, the International Monetary Fund (IMF) has predicted. Martine Guerguil, the chief of the IMF mission to Uganda, said the projected slowdown is from 8.5% for the last several years to 6.2% in 2008/09.
“The effects of the crisis are starting to be felt in lower export growth, a decline in foreign capital inflows, depreciation of the shilling as well as lower tax revenue collections. The deceleration in growth could be more pronounced if the global recession turns out to be deeper than anticipated,†she said in a statement.
This was after conclusion of the fifth review of Uganda’s three-year economic programme supported by the IMF’s Policy Support Instrument (PSI). The PSI is designed for low-income countries that don’t need IMF financial assistance, but still seek IMF advice, monitoring and endorsement of their policies
The IMF said that while the current macro-economic stance was appropriate, it needed fine-tuning to address the evolving economic outlook.
The IMF backed the Government’s plans to maintain a high level of development spending in 2008/09 and 2009/10 despite the projected shortfall in revenue.
“For the remainder of the fiscal year 2008/09, the main challenge will be to ensure effective absorption of this spending, in particular for infrastructure development. For 2009/10, the mission sees a need for the planned increase in development spending to be matched by higher recurrent outlays,†Guerguil said.
She added that this balanced approach would have the dual effect of sustaining growth in the near-term and enhancing Uganda’s growth potential over the medium-term.
Guerguil noted that an uncertain market environment would continue to complicate Bank of Uganda’s (BoU) monetary policy management.
“The BoU has shown an appropriate combination of flexibility and caution in its approach to these challenges. Its staff is working on refinements for the current liquidity management framework. This is expected to provide a more flexible response to unanticipated shocks.â€
She said the central bank’s challenge was to ensure inflation remains on a downward path while providing sufficient liquidity to support a healthy level of activity.
The IMF’s executive board will discuss the fifth review of Uganda’s economic programme under the PSI in May 2009.
UGANDA’S growth rate will slow down to 5.5% in 2009/10 due to the global financial crisis, the International Monetary Fund (IMF) has predicted. Martine Guerguil, the chief of the IMF mission to Uganda, said the projected slowdown is from 8.5% for the last several years to 6.2% in 2008/09.
“The effects of the crisis are starting to be felt in lower export growth, a decline in foreign capital inflows, depreciation of the shilling as well as lower tax revenue collections. The deceleration in growth could be more pronounced if the global recession turns out to be deeper than anticipated,†she said in a statement.
This was after conclusion of the fifth review of Uganda’s three-year economic programme supported by the IMF’s Policy Support Instrument (PSI). The PSI is designed for low-income countries that don’t need IMF financial assistance, but still seek IMF advice, monitoring and endorsement of their policies
The IMF said that while the current macro-economic stance was appropriate, it needed fine-tuning to address the evolving economic outlook.
The IMF backed the Government’s plans to maintain a high level of development spending in 2008/09 and 2009/10 despite the projected shortfall in revenue.
“For the remainder of the fiscal year 2008/09, the main challenge will be to ensure effective absorption of this spending, in particular for infrastructure development. For 2009/10, the mission sees a need for the planned increase in development spending to be matched by higher recurrent outlays,†Guerguil said.
She added that this balanced approach would have the dual effect of sustaining growth in the near-term and enhancing Uganda’s growth potential over the medium-term.
Guerguil noted that an uncertain market environment would continue to complicate Bank of Uganda’s (BoU) monetary policy management.
“The BoU has shown an appropriate combination of flexibility and caution in its approach to these challenges. Its staff is working on refinements for the current liquidity management framework. This is expected to provide a more flexible response to unanticipated shocks.â€
She said the central bank’s challenge was to ensure inflation remains on a downward path while providing sufficient liquidity to support a healthy level of activity.
The IMF’s executive board will discuss the fifth review of Uganda’s economic programme under the PSI in May 2009.