IMF Board Approves Immediate Disbursement of $240m Credit to Uganda
Washington, DC: The Extended Credit Facility (ECF) Arrangement for Uganda’s combined second and third reviews were completed by the Executive Board of the International Monetary Fund (IMF).
In addition, the Executive Board waived a performance requirement related to the Bank of Uganda’s stock of net international reserves that had not been met.
A payout of SDR 180.5 million, or roughly US$240 million, was made immediately after the completion of the combined second and third reviews, bringing the total distribution to date to US$625 million.
The Executive Board approved the ECF Arrangement for Uganda on June 28, 2021, for a total of SDR 722 million (200 percent of quota), or approximately US$1 billion. Its goals are to support the short-term response to the COVID-19 pandemic and foster more inclusive private sector-led long-term prosperity.
The main goals of reforms are to increase governance, preserve debt sustainability, free up funds for priority social spending, and improve the regulatory frameworks for the financial and monetary systems.
Despite mounting pressure from consecutive local shocks, particularly new public health issues, and increasing pressure from global shocks, the Ugandan government has been able to maintain macroeconomic stability while preserving the post-COVID-19 recovery.
In FY 22/23, the GDP is predicted to grow by 5.3 percent (down from a previous estimate of 6 percent in March 2022), while headline inflation is predicted to increase to 8.3 percent (marked up from 4.6 percent at the 1st review).
The impact of the conflict in Ukraine, tighter external financial conditions, the drought, and rising domestic borrowing rates are reflected in the projected adjustments. The forecast is nevertheless fraught with dangers, such as those posed by rising import inflation, declining external demand, climate change, and future public health.
External buffers will be strengthened by strict macroeconomic policies and ongoing exchange rate flexibility. To bring overall domestic consumption more in line with domestic production, lower the current account deficit, and manage inflation, fiscal consolidation and monetary tightening are required.
Despite the difficult environment and the extensive reform agenda, the authorities have made significant progress toward structural reforms and have met all but one of the quantitative performance criteria as well as the majority of the indicative targets for March, June, and September 2022.
By I amending the regulations to include assets that are beneficially owned in the asset declarations, (ii) publishing data on compliance with the Leadership Code Act and on requests to access the declarations, and (iii) amending the law to establish a central registry for beneficial ownership information of legal entities, steps have been taken to strengthen the governance and anticorruption frameworks, with forthcoming regulations expected to allow timely a timely a request to access the declarations. The rationalization of tax expenditures will be accelerated by the implementation of the plan.
Executive Board Assessment
Following the Executive Board discussion, Mr Bo Li, Deputy Managing Director and Acting Chair made the following statement:
“The Ugandan authorities remain committed to their economic program amidst a challenging environment. Most quantitative targets were met in 2022. Six of the twelve structural benchmarks due between March and December 2022 have been completed. A structural benchmark on the asset declaration regime was converted into a prior action for the review and has been met.
In the coming years, effective program implementation will be crucial to maintaining economic stability and advancing the nation’s social and developmental goals.
“Amid a deteriorating external environment and the significant acceleration in inflation, the minor easing of the fiscal deficit in the fiscal year 2022–2023 relative to the programmed objective was necessary to support vulnerable households and introduce cost–of–living adjustments in the public sector.
Given the tighter global financial conditions and the authorities’ determination to continuing successful program implementation, the temporary deviation of the reserve cover is also justified.
To keep debt manageable and preserve external buffers, returning to the planned fiscal consolidation path and reserve cover is still crucial. In order to achieve the fiscal goals and meet significant development needs, increased domestic revenue mobilization—including the elimination of ineffective tax exemptions, rationalization of non-priority spending, and shifting the composition of spending toward priority social areas—will be necessary. The Parish Development Model’s launch was a positive step forward.
“Risks to financial stability should continue to be kept to a minimum because the banking sector is well-capitalized. To reach the core inflation objective, monetary policy should continue to tighten.
Continued exchange rate flexibility is needed to preserve external buffers, with foreign exchange interventions limited to smoothing excessive exchange rate fluctuations. Continued improvements in the Bank of Uganda’s autonomy and governance framework would be important.
“Accelerating the momentum on structural reforms is essential to help move Uganda towards attaining its goal of middle-income status. Priorities include enhancing domestic revenue mobilization, strengthening governance, transparency, the anti-corruption framework and the AML/CFT regime, advancing the financial inclusion agenda, and climate adaptation measures.”
Table 1. Uganda: Selected Economic Indicators, FY2020/21-FY2023/24
Real GDP Growth (%)
Headline Inflation – average (%)
Core Inflation – average (%)
Central Government Finances
Revenue and Grants (% of GDP)
Expenditure (% of GDP)
Primary Balance (% of GDP)
Fiscal Balance (% of GDP)
Public Debt (% of GDP)
Money and Credit
Broad money (% change)
Credit to Private Sector (% change)
Policy Rate, EOP (%)
Balance of Payment
Current Account Balance (% of GDP)
Reserves (in months of next year’s imports)
External Public Debt (% of GDP)
REER (% change)