By Samuel Sanya
WEAKER export receipts, less aid and private sector inflows have worsened Ugandaâ€™s current account position, the Central Bank has said.
The current account balance is the net position of outflows and inflows in to the country.
A healthy current account would see more money flowing into the country than flowing out.
â€œOn a quarterly average, current account balance worsened by 38% between 2008/9 and 2010/11, largely reflecting the impact of the financial crisis and global recession as the demand for Ugandan exports reduced. Portfolio flows have declined almost to zero, aid and private sector inflows have also declined substantially,â€ a Bank of Uganda document said.
The Central Bank says this trend is seen in the depreciation of the shilling.
The average annual depreciation rate of the shilling between January 2009 and January 2011 was 13.5%, but for the financial year 2010/11, the depreciation rate went much higher, averaging at about 16% on an annual basis.
The Uganda shilling is now trading at sh2,400 a dollar on the open market compared to sh1,872.8 in 2009.
â€œAs of January 2011, the total budget and project aid receipts (excluding non-project transfers) for the financial year 2010/11 amounted to $495.92m, which is a decrease of about 6.73% compared to the corresponding period in the 2009/10 financial year,â€ the report noted.
Export receipts have substantially declined since January 2010 after recovering in the second half of 2009.
Coffee exports, the highest single export earner, amounted to 237,747 bags worth $28.69m in December 2010, representing a decrease of 10.9% and 10.7% in volume and value, respectively over the previous month.
On an annual basis, the value of exports receipts decreased on average by 8.7% in the first half of 2010/11.
Comparatively, private sector imports increased to $336.22m compared to $319.61m recorded in November 2010 and $320.51m in December 2009, further aggravating the countries current account balance.
Official aid inflows in January 2011 amounted to equivalent of about $9.12m. Budget support was about $1.12m, project inflows about $7.97m and non-project transfers $0.03m.
Preliminary, estimates indicate that the level of gross foreign reserves stood at $2.76b as at the end of January 2011, equivalent to 5.1 months of future imports of goods and services.