By Sylvia Juuko
UGANDA will attain the 7% growth target despite the temporary shock from Kenyaâ€™s post-election violence earlier in the year, the International Monetary Fund (IMF) has predicted.
â€œThe impact of the unrest in Kenya on economic growth appears to have been limited as the disruption to the all-important route for Ugandaâ€™s exports and imports was short-lived. Together with higher international oil prices, it has contributed to a core inflation rate of some 7%, somewhat above the authoritiesâ€™ 5% target,â€ the IMF said in a statement.
The statement, issued by the IMF mission following the conclusion of their visit to Uganda, said increased economic activity was evident from the revenue performance, rapid credit expansion and high import demand.
The IMF mission was in Kampala from March 10 to 20 to review the countryâ€™s three-year economic programme under the Policy Support Instrument.
The IMF said while investment in energy had been scaled up, similar investments need to be undertaken in roads and rural development.
â€œThe 2008/09 Budget, currently under preparation, needs to balance the need to allocate resources to these areas with competing priorities and within a framework that supports macro-economic stability. The Bank of Ugandaâ€™s continued focus on low inflation will provide an enabling environment for private sector development,â€ the fund said.
The fund said the central bank was addressing upward pressures on money supply from large foreign exchange inflows in order to move inflation back in line with the target.
â€œThe shilling has appropriately appreciated against the US dollar in recent months, particularly bearing in mind the dollarâ€™s weakness against major currencies,â€ the IMF said.
It said the Government was using windfall from revenue performance to offset spending pressures that arose from response to emergencies like flooding and the Ebola outbreak.