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The Ministry of Finance Permanent Secretary and Secretary to the Treasury, Ramathan Ggoobi, announced that the International Monetary Fund (IMF) has approved another $120 million (approximately Shs470 billion) as a post-COVID-19 recovery package for Uganda. This funding, Mr. Ggoobi emphasized, will play a crucial role in supporting budget activities and the overall economy.
Speaking at a press briefing in Kampala following the completion of the Fifth Review of the IMF Extended Credit Facility, Mr. Ggoobi highlighted the significance of this disbursement, stating, “With the successful conclusion of the Fifth Review, another $120 million will be disbursed in the next few days, which will go a long way in supporting activities in the budget and economy in general.” He underscored that this disbursement and the completion of the Fifth Review reflect the confidence the IMF has in Uganda’s economic trajectory.
Uganda recently concluded the Fifth Review under the Extended Credit Facility on March 6, with the IMF acknowledging a broad-based recovery in the economy while emphasizing the need for further reforms. The IMF approved a $1 billion (approximately Shs3.9 trillion) Extended Credit Facility for Uganda in June 2021 to aid the post-COVID-19 recovery efforts, focusing on increasing household incomes, fostering private sector development, and promoting inclusive growth.
During the press briefing, Ms. Izabela Karpowicz, the IMF resident representative in Uganda, highlighted the acceleration in economic growth, supported by factors such as declining inflation, investments in infrastructure like the new oil pipeline, and increased gold exports and tourism. Despite positive growth trends, inflationary pressures persist due to currency fluctuations.
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While acknowledging reduced risks to economic growth, Ms. Karpowicz cautioned against potential challenges such as decreased concessional financing and foreign direct investment, which could impact growth and widen the current account deficit. Additionally, she highlighted concerns regarding high international interest rates and growing reliance on external financing for debt servicing.
Looking ahead, Uganda anticipates a growth rate of 6 percent in the 2023/24 financial year, with expectations of further growth as oil production commences. However, vigilance is required to mitigate risks and ensure sustained economic recovery amidst evolving global economic conditions.
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