IMF Staff Concludes Visit to Uganda
An IMF team led by Axel Schimmelpfennig visited Uganda from October 23 to November 3, 2017, to initiate discussions for a macroeconomic program under the Policy Coordination Instrument (PCI).
At the end of the visit, Mr. Schimmelpfennig issued the following statement:
“The team had productive discussions and progress was made on developing the pillars of a three-year economic program. The team will continue the dialogue in the coming months to define targets for the next fiscal year and identify specific measures to achieve them.
“Growth is projected to reach 5 percent in 2017/18 from 4 percent in 2016/17, supported by better weather conditions, while private sector credit remains muted. Inflation was 4.8 percent year-on-year in October. Bank of Uganda has appropriately continued its easing cycle in October, with core inflation projected to remain in line with the 5 percent target. The team notes with concern the increase in the poverty headcount ratio to 27 percent of the population in the 2016/17 UBOS Household Survey.
“Implementation of the FY17/18 budget is challenging. Parliament did not approve some of the government’s revenue enhancing measures, while additional expenditure pressures have given rise to a supplementary budget. This widens the overall fiscal deficit and increases the government’s financing needs. The team advised the authorities to explore alternative revenue measures and contain expenditure pressures, while protecting social spending.
“In establishing the FY18/19 fiscal targets, the team encouraged the authorities to continue the strategy of increasing revenue collection by at least 0.5% percent of GDP per year. The team also underlined the importance of targeting a deficit that maintains debt sustainability and is consistent with available domestic financing. The team welcomed the authorities’ ongoing work to identify policy implications from the Household Survey and the stock-taking exercise of the infrastructure investment pipeline which will lead to better prioritized development spending.
“The IMF team met with Minister Kasaija, Governor Tumusiime-Mutebile, State Minister of Finance for Planning Bahati, State Minister of Finance General Duties Ajedra, Permanent Secretary and Secretary of the Treasury Muhakanizi, Deputy Governor Kasekende, Commissioner General Akol, and other senior government officials, representatives of civil society, the private sector, and development partners.
“The team thanks the authorities for the open and constructive dialogue.”