The Ugandan economy has been severely impacted by the Covid-19 pandemic, which, according to the IMF, has led to increased poverty, a deterioration of fiscal balances, and pressure on external reserves. To revive the economy, the authorities have launched a reform program in cooperation with the IMF.
The International Monetary Fund said on Wednesday that it had reached an agreement with Uganda to release approximately $240 million in funding for the country.
This funding is intended to support reforms being implemented in the country. These measures concern fiscal and monetary policies, growth and debt, the resilience of the financial sector, and the fight against corruption.
Uganda will have access to this funding once the IMF Executive Board has officially completed the reassessment in the coming weeks.
The IMF stated that the East African country's economic recovery was underway despite a series of constraints, including weak global demand and numerous supply chain disruptions.
According to the IMF, economic growth is expected to reach 5.3% for the 2022-2023 period. This forecast is down 0.7% compared to the one issued last March during the first review. This situation has been exacerbated by weak global demand and the impact of rising inflation and interest rates on domestic demand.
In addition, the institution also forecasts an increase in inflation to 8.3%, due to rising commodity prices and the costs of imported inputs.
These prospects are expected to improve by 2024-2025, particularly with the start of oil production, the anticipated easing of commodity price pressures, and the impact of strengthened monetary policy. Several measures implemented in the country, such as fiscal consolidation, are also necessary "to keep debt at a sustainable level and provide the funds essential for achieving the Sustainable Development Goals," the IMF notes.
