Header advertisement
  • HOME
  • Business
  • Uganda’s Risks of Debt Sustainability Increase – IMF

Uganda’s Risks of Debt Sustainability Increase – IMF

Axel Schimmelpfennig the IMF Chief of Mission in Uganda (2nd L) speaking at a news conference together with BOU Governor Prof. Tumusiime Mutebile (2nd R) and Finance Minister Matia Kasaija (R) in October last year.
Axel Schimmelpfennig the IMF Chief of Mission in Uganda (2nd L) speaking at a news conference together with BOU Governor Prof. Tumusiime Mutebile (2nd R) and Finance Minister Matia Kasaija (R) in October last year.

    By: Paul Ampurire

  • Jan 11,2017
  • 754 Viewed

Uganda is exposed to increased vulnerabilities towards its external debt sustainability despite indications of low risk of debt distress, the IMF has revealed.

A report on IMF’s Seventh Review under the Policy Support Instrument indicates that Uganda will be confronted with shocks from a low grobal growth, tighter global financing conditions and negative spillovers from the South Sudan conflict which will weigh down exports.

The review undertaken jointly by IMF executives and government of Uganda officials in October 2016 also highlights the growing refugee influx and changes in weather partners which affect food prices as other significant risks.

“Near-term risks are to the downside. Uganda remains exposed to risks from adverse weather and global and regional developments. Continued problems with public investment efficiency would undermine growth prospects and debt sustainability.”

Uganda’s average growth rate declined from close to 8% between 2006 and 2011 to 4.5% in the period between 2011 and 2016. In the same period (2011 to 2016), the current account deficit widened from 6% of GDP to 7%.

IMF advises on boosting of exports over the medium term, including through effective public investment to fill infrastructure gaps. “If growth and exports prospects were to be revised down in the future, this could adversely affect Uganda’s risk rating, as could additional reliance on non-concessional borrowing that would not lead to higher growth rates.”

To mitigate these risks, IMF recommends sound project selection and implementation, reprioritization of expenditures, domestic revenue mobilization and strong governance frameworks.

On monetary policy, the IMF credits Bank of Uganda for “successfully steering inflation” and undertaking an easing cycle for 5 consecutive months since April 2016.

“Overall, the banking sector remains well capitalized, despite elevated NPLs. The BoU has appropriately taken over an under-capitalized systemically important bank. Effective and swift resolution of this bank is a key priority.”

Non-Performing Loans (NPLs) rose to 8.3% in June 2016 from 4% a year ago.

On the fiscal aspect, IMF notes that tax revenue fell short of target by 0.3 percent of GDP, reflecting lower nominal growth. There was a “higher than anticipated election-related spending led to an overrun of current expenditure of 0.1 percent of GDP.”

“Thus, the program fiscal deficit target (QAC) was missed by 0.5 percent of GDP, and the government partly relied on BoU advances for its financing needs.”

“Externally-financed development spending (including hydro power projects) was under-executed by 2.4 percent of GDP, and the overall fiscal deficit was 1.2 percent of GDP lower than anticipated, partly because the necessary domestic contribution was not budgeted for.”

On the whole, the review states that Uganda’s economy has performed “reasonably well in a complex environment” with growth slowing marginally to 4.8 percent in FY15/16.

# , #

Don't miss the stories AND LET'S go!!!

1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Related Articles

Airtel Uganda Launches 100% Bonus Campaign

Just a few weeks after the completion of the ‘Tulumbe AFCON’ campaign, Airtel Uganda has announced the launch of a new campaign aimed at giving

Entebbe Expressway Project Rewards 30 Ugandan Employees

Kampala-Entebbe Expressway Project has recognized and awarded up to 30 Ugandan employees working with the Project, for their outstanding contribution to the implementation of the

Govt Increases Salaries for Chief Justice, Permanent Secretaries

Salaries for the Chief Justice, his deputy, head of public service, deputy head of public service and permanent secretaries have been enhanced. According to a

Minister Kasaija Won’t Fund UBC ‘Until Management Is Disbanded’

Despite the financial challenges that the National Broadcaster the Uganda Broadcasting Corporation (UBC) is facing, the Minister of Finance, Planning and Economic Development, Matia Kasaija

Minister Kasaija: Expect No New Tax in 2017/2018 Budget

The Finance of Finance, Planning and Economic Development, Matia Kasaija has revealed that government has no intentions of proposing new taxes in the Financial Year

MTN, MMI Holdings Launch Mobile Based Insurance Services

MTN Uganda, in partnership with aYo, have Tuesday announced innovative mobile based micro-insurance products, Recharge with Care and Send with Care. The two are the

OIL CASH SAGA: Parliament Resumes Business

Parliament has announced resumption of business on Wednesday, a week after Speaker Rebecca Kadaga suspended plenary sittings following a controversial order issued by the Deputy

EALA Speaker Decries Delayed Implementation of Common Market Protocol

The Speaker of the East African Legislative Assembly (EALA) Dan Kidega has expressed dismay over the slow implementation of the East African Common Market Protocol by

RWANDA: Gen Kayihura, Wasajja Attend King Kigeli’s Burial Ceremony

The last King of Rwanda, Kigeli V Ndahindurwa has been laid to rest in Nyanza District, Rwanda, ending a difficult journey in exile. The former

Petroleum Authority Appoints New Directors

The Petroleum Authority of Uganda (PAU) has appointed five directors to support the implementation of the association’s mandate of monitoring and regulating the exploration, development

Header advertisement
Header advertisement

Header advertisement

Header advertisement
Error, no group ID set! Check your syntax!
Latest News

Header advertisement

PHOTOS: Col. Ankunda Hands Over Office as UPDF Spokesperson

It was a combination of  sad and joyous moments on Tuesday evening as Lt. Col. ... (Read More)

Education Ministry Halts Further Transfer of Teachers

The Education Ministry has halted further transfers of teachers in government ai... (Read More)

Gov’t to Crack Whip on Teacher Absenteeism, Errant Schools

Teachers in government aided schools who abscond from work including those who e... (Read More)

49% Ugandans Feel Safe When Outside Alone at Night – GCIC Poll

Recent findings by the Government Citizen Interaction Centre (GCIC) have reveale... (Read More)

Rwanda Police Intercepts Stolen Cars With Ugandan Plates

Rwanda National Police (RNP) has intercepted and impounded two cars and a motorc... (Read More)

Kasaija Launches Shs 46Bn Agriculture Investment Fund

Finance Minister Matia Kasaija has Tuesday launched a Ugsh 46 billion agro equit... . (Read More)

Ochwo Ready for National Boxing Open Championship

Mbale boxer David Ochwo is upbeat ahead of the Uganda Open Boxing Championship t... (Read More)

Former KCCA, SC Villa Midfielder Joins Kakamega Homeboyz in Kenya

Former KCCA FC, SC Villa and URA midfielder Patrick Senfuka Masiko has landed a ... (Read More)

MUBS Clarify on Murdered Girl

Makerere University Business School have come out to clarify on reports that one... . (Read More)

Amb Mfumukeko Advises on EAC Cross-border Power Trade, Grid Interconnection

The Secretary General of the East African Community, Amb. Liberat Mfumukeko, ove... (Read More)


Millennials Don’t Know Where Museveni Found Uganda – Minister

As preparations commence for this year’s NRM/NRA 31st anniversary, Ugandans ha... (Read More)


Error, no group ID set! Check your syntax!
Special Reports

Byanyima: We’re in Court B’se Amin Soldiers Killed Kanyamunyu’s Father, Relatives

As the war against Dictator Idi Amin raged in 1978, prominent Ugandan families w... (Read More)

New Year’s Night at Kampala Sheraton Hotel and the Taste of Food Fit for the gods

The weather is chilly; lights flicker as live music plays pacifyingly in the bac... (Read More)
Like Us on Facebook
Acquistare Cialis here.
Header advertisement