For more information, see Uganda and the IMF
November 19, 1999Mr. Michel Camdessus
International Monetary Fund
Washington, D.C. 20431
1. The attached memorandum of economic and financial policies (MEFP) of the Government of Uganda describes the progress made in implementing the 1998/99 (July-June) program supported by the second annual arrangement under the Enhanced Structural Adjustment Facility (ESAF), which was approved by the Executive Board of the Fund on November 11, 1998, and it sets out the objectives and policies that the Government intends to pursue during 1999/2000 for the program for the third annual arrangement under the ESAF, and for the medium term. This program was formulated in conformity with the updated policy framework paper (PFP), which was prepared in collaboration with the staffs of the Fund and the World Bank, and which was transmitted to the Fund and the World Bank today.
2. In support of these objectives and policies, the Government of Uganda hereby requests the third annual arrangement under the Enhanced Structural Adjustment Facility, in an amount equivalent to SDR 26.78 million (14.8 percent of quota). The Government will also be requesting support from the World Bank and from bilateral and multilateral donors and creditors.
3. The Government of Uganda will provide the Fund with such information as the Fund may request in connection with Uganda's progress in implementing the economic and financial policies and achieving the objectives of the program.
4. The Government believes that the policies and measures set forth in the attached memorandum are adequate to achieve the objectives of the program but will take any further measures that may become appropriate for this purpose. During the period of the second annual arrangement, the Government of Uganda will consult with the Managing Director of the Fund on the adoption of any measures that may be appropriate, at the initiative of Uganda or whenever the Managing Director requests such a consultation. Moreover, after the period of the second annual arrangement and while Uganda has outstanding financing obligations arising from loans under the arrangement, the Government will consult with the Fund from time to time, at the initiative of the Government or whenever the Managing Director requests consultation on Uganda's economic and financial policies.
of the Government of Uganda for 1999/2000
1. In 1997, the government of Uganda launched the Poverty Eradication Action Plan (PEAP), which set the goal of reducing the incidence of poverty in Uganda to 10 percent or less by 2017. Maintaining strong, broad-based economic growth, increasing household incomes, enhancing the standard of living of the poor, and improving governance through enhanced transparency and accountability are the cornerstones of the PEAP. The government's public expenditure program is the key mechanism for ensuring that the poorest members of society benefit from growth by providing them with access to basic public services, including health, education, security, and infrastructure.
2. Accordingly, the medium-term economic program that the government began to implement in June 1997, in the context of a three-year arrangement under the Enhanced Structural Adjustment Facility (ESAF), set forth actions to support the high economic growth and poverty reduction objectives. In April 1998, the Fund determined that Uganda had fulfilled the conditions for the completion point under the Heavily Indebted Poor Countries (HIPC) Initiative, and Uganda was granted US$347 of debt relief in net present value (NPV) terms, which translated into US$45 million in debt relief under the Initiative in 1998/99. The amount was allocated to key antipoverty programs through the Poverty Action Fund (PAF) that was established in 1998/99 to provide a transparent link between donor support, including debt relief, and the government's poverty reduction program. Spending on Priority Program Areas (PPAs, which include core antipoverty programs) increased by 60 percent in 1998/99, compared with an 18 percent increase in overall expenditures. The government has also begun to implement a system of enhanced monitoring of key social indicators to improve its ability to assess the effectiveness of its antipoverty expenditure program. The government remains committed to the economic policies for 1999/2000 set forth in its memorandum of economic and financial policies (MEFP) dated July 15, 1999 (EBS/99/149, 8/6/99, Appendix I). This memorandum updates and highlights the policies to be implemented in 1999/2000 in support of the government's poverty reduction and high economic growth objectives.
3. Real GDP increased by 7.8 percent, compared with the original projection of 7 percent, reflecting primarily a strong recovery in agriculture, which grew by 8 percent. Consumer price inflation was contained to 5.3 percent, despite a temporary increase in food prices and a sharp depreciation of the Uganda shilling toward the end of the fiscal year. All quantitative benchmarks established for June 1999 were met, apart from the ceiling on gross issuance of promissory notes. The overall fiscal deficit (excluding grants), at 6.5 percent of GDP, was kept below the programmed target of 6.7 percent of GDP as total revenues, at 12.1 percent of GDP, were slightly higher than programmed, while total expenditures were contained within the program ceiling despite overruns in defense outlays. This necessitated cuts in nonpriority development projects. Major steps were taken to facilitate the implementation of the PEAP, including the decentralization to districts of the provision of a wide range of public services, continued implementation of the Universal Primary Education (UPE) program, and increased civil society participation in the monitoring of service delivery. Moreover, the capacity of the Poverty Monitoring Unit (PMU) to analyze and diagnose poverty issues and their linkage to budgetary allocations and policy decisions was strengthened. In this connection, the government continued to monitor social outcome indicators, which were mixed for 1998/99 (Table 1). Money and quasi money (M3, including foreign exchange deposits) increased by 14 percent, in line with the program. However, broad money (M2) rose by considerably less than envisaged under the program, reflecting the reclassification (late in the year) of government deposits, which had previously been recorded in broad money, and a shift out of shilling deposits into foreign currency deposits late in the year, owing to temporary instability in the foreign exchange market.
4. The Uganda shilling depreciated by 15 percent against the U.S. dollar during the year ended June 1999. On an annual average basis, the nominal and real effective exchange rates depreciated by 14 percent and 13 percent, respectively. Sluggish demand for imports and somewhat higher exports resulted in a smaller external current account deficit (excluding official grants) than programmed. However, owing to delays in disbursements of official grants and loans and, to a lesser extent, a shortfall in private transfers, the overall balance of payments recorded a deficit of US$37 million against a programmed surplus of US$47 million. As a result, gross reserves fell by US$18 million, compared with a programmed buildup of US$82 million. Nonetheless, the gross international reserve coverage remained relatively strong at the equivalent of 4.8 months of imports of goods and services. With regard to the HIPC Initiative, agreements have been signed with all but two Paris Club creditors, and these two are expected to be signed soon. Uganda received relief from all but four multilateral creditors, two of which have indicated that they will not be able to provide relief on terms consistent with their commitments under the HIPC Initiative. With the exceptions of Tanzania and Rwanda, non-Paris Club bilateral creditors have indicated that they will not be able to provide any relief at all. All structural benchmarks and performance criteria established under the 1998/99 program were met with the exceptions of those pertaining to the number of audits conducted by the Large Taxpayer Department (LTD) and the size of the "number-limited" staff for June 1999. With regard to the former, new understandings were reached, and appropriate actions are being taken. The slippage with regard to civil service reform is being addressed in the context of the 1999/2000 program.
5. The government's overall macroeconomic objectives remain unchanged: to (i) achieve real GDP growth of 7 percent a year; (ii) contain inflation at 5 percent a year; and (iii) maintain gross international reserves at a level equivalent to five months of imports of goods and services. Under current projections, net donor support (including grants) is projected to rise to 10.2 percent of GDP in 1999/2000 before falling gradually to 7.5 percent of GDP in 2001/02 (measured at the end-June 1999 U.S. dollar-Uganda shilling exchange rate). These net inflows would more than cover the projected increase in the fiscal deficit (to 8.1 percent of GDP in 1999/2000) arising from enhanced spending on social and priority programs. The deficit would fall to 6.4 percent of GDP in 2001/02. At the same time, the government would clear all identified domestic arrears and effect a modest buildup of deposits with the banking system. Fiscal revenues would rise by about 0.5 percent of GDP a year. On this basis, total expenditures would rise by about 2.0 percent of GDP in 1999/2000 and then decline gradually relative to GDP. Outlays for core antipoverty programs (PPAs plus the UPE component of domestic development expenditure) would increase from 2.3 percent to 2.7 of GDP and then rise modestly. However, the projected decline in donor project support after 1999/2000 would require a reduction in the rate of overall government development spending. These projections do not include possible debt relief that may be granted to Uganda under the enhanced HIPC Initiative. In the event of larger donor inflows, the government would increase outlays for current and development expenditures, in the context of larger fiscal deficits, thus accelerating the implementation of the PEAP to the extent compatible with sustained macroeconomic stability. Based on a continued modest decline in money velocity, broad money (M2) growth in the range of 15–17 percent a year would be consistent with the inflation and real GDP growth objectives.
6. Fiscal policy. Total revenues are projected to increase by 0.4 percent of GDP to 12.5 percent of GDP, reflecting the carryover effects of the 1998/99 nominal depreciation of the shilling and continued improvements in tax administration and taxpayer compliance. The latter are expected to result from the establishment of the LTD of the Uganda Revenue Authority and improved customs operations and taxpayer relations. The reorganization of the LTD along functional lines has been completed with the separation of the collection and audit functions; performance indicators for these divisions have been developed. With the objective of improving taxpayer relations and compliance, a Large Taxpayer Advisory Committee, including representatives from the private sector, has been set up. To highlight the government's commitment to improve tax administration, the LTD plans to complete 12 comprehensive and 200 issue-oriented audits by December 31, 1999 as a performance criterion under the 1999/2000 program, and a cumulative 28 comprehensive, 450 issue-oriented, and 90 refund audits by June 31, 2000 as a structural benchmark. A value-added tax (VAT) combined payment/return form was introduced in July 1999, and procedures for instant VAT refunds have also been introduced. A compulsory destination inspection will be imposed for imports without preshipment inspection, and its cost will be borne by the importer. The URA management will present to its Executive Board by December 31, 1999 an updated customs modernization project. The URA will establish a Duty Drawback Unit, introduce automatic drawback provisions, and simplify administrative procedures.
7. Total expenditures would increase by about 2 percent of GDP to 20.6 percent of GDP. Net donor inflows (including grants), currently projected at 10.2 percent of GDP, would be sufficient to cover the deficit, enable the government to reduce domestic nonbank liabilities by 1.5 percent of GDP—including more than half of the currently verified stock of domestic arrears—and raise net claims on the banking system by 0.7 percent of GDP. The government intends to use the increased availability of donor support to enhance its antipoverty public expenditure program. In this context, outlays for PPAs, including the UPE component of the domestic development budget, would rise from 2.3 percent of GDP to 2.7 percent of GDP. Other development expenditures (excluding defense) would rise from 7.0 percent of GDP to 8.0 percent of GDP. Current expenditures are budgeted to rise by 0.3 percent of GDP to 11.3 percent of GDP, with statutory expenditures rising to 0.4 percent of GDP, largely on account of the planned referendum on the multiparty elections. Defense outlays (recurrent and development) would be held to 2.0 percent of GDP, on the basis of an expected diminution of regional tensions.
8. To enhance the effectiveness of the PAF and its flexibility to respond to local priorities for poverty reduction, the Ministry of Finance, Planning and Economic Development (MFPED) will develop simplified guidelines for all recipients of conditional PAF grants, based on quantifiable output-oriented work plans. Completion of these work plans for all districts for 2000/01 by March 31, 1999 would be a structural benchmark under the program. The monthly release of funds will be changed to quarterly releases with effect from July 1, 2000, and will be directly linked to the submission of the quarterly accountability and status reports from the line ministries, districts, and accountability institutions. In cases where the reports are delayed, the release of funds will be put on hold until the reports are received. A full-time coordinator of PAF operations will be appointed within the MFPED, initially for six months. With the objective of reducing regional disparities in access to social services, the equalization grant will be distributed before December 31, 1999. This will constitute a structural performance criterion under the proposed program. In the first year of PAF operations, key institutional players lacked awareness of their changing roles and responsibilities. To remedy this, the authorities will develop, by December 1999, a strategic communication plan to disseminate information on the respective roles and responsibilities of local and central governments in accounting for, and monitoring the use of, PAF resources.
9. The government is keenly aware of the acute need to bring expenditure commitments under control and to stop the accumulation of domestic arrears. There have been some initial teething problems in implementing the new Commitment Control System (CCS), which was expanded with effect from July 1999 to cover all ministries. The first ministerial reports are two months overdue. The presentation of Treasury Inspector reports on the first-quarter operations of the CCS to the cabinet and the President will constitute a prior action for Board consideration of the third annual arrangement under the ESAF. The report will include recommendations on penalties for noncompliant accounting officers. Preparations will be made to bring domestic development spending into the CCS by June 30, 2000. Verification of the stock of domestic budget arrears as at end-June 1999 by the Auditor General by June 2000 would constitute a structural performance criterion under the proposed program. Consistent with the overall deficit (excluding grants) and the net claims on the government by the banking system targets under the program, the government will consider using treasury bill issues to manage the cash flow of the government. Moreover, to maintain aggregate and sectoral expenditure discipline, supplementary appropriations on the recurrent and domestic development budgets will be limited to 3 percent of the budgeted amounts. In the event that supplementary appropriations are provided, at least 60 percent of the appropriated amounts will be used for PPA spending. Furthermore, as a continuous quantitative performance criterion under the program, no new promissory notes or similar instruments will be issued during 1999/2000. The recapitalization of the Bank of Uganda (BOU) will be completed before March 31, 2000, and the BOU would effect its dividend transfer to the MFPED. This action will constitute a prior action for the completion of the first review of the proposed program.
10. Monetary policy. The main objective of monetary policy will remain containing inflation at 5 percent. To this end, the BOU will continue to implement a base money program as its principal mechanism of monetary control. It will closely monitor a broad spectrum of monetary indicators and will take appropriate measures in response to any signs of incipient inflationary pressure. On the basis of a modest decline in money velocity and an expected reversal of the shift into foreign currency deposits that took place late last year, broad money (M2) growth is projected at 17 percent. The disruptions in the banking sector in 1998/99 induced a temporary decline in the money multiplier, owing to an increase in the ratio of currency in circulation to broad money and a temporary liquidity overhang late in the year. As these processes reverse, the money multiplier is expected to return to more normal levels and resume its gradual upward trend. Consistent with the broad money program, the government will be maintaining a floor on net international reserves and a ceiling on net domestic assets of the banking system. Commercial bank credit to the private sector is projected to expand by 15 percent.
11. External sector policies. External policies will continue to aim at the medium- and long-term sustainability of the balance of payments position. Further diversification of exports and increased foreign direct investment are necessary to reduce Uganda's balance of payments vulnerability to large movements in world coffee prices and uncertain private transfer inflows. In 1999/2000, the current account, excluding official transfers, is projected to increase by about ½ of 1 percentage point of GDP, from 8.9 percent to 9.5 percent of GDP, as a result of a small pickup in imports and the continued deterioration in the terms of trade. The projected increase in export values would result from the growth of noncoffee export volumes and, to a lesser extent, coffee export volumes, both of which would more than offset a forecast decline in commodity prices. Real imports are projected to grow by slightly more than real GDP, while private transfers would recover from an unusually low level in 1998/99. Donor assistance is projected to rise substantially in 1999/2000, with a continued shift from project support to import (budget) support, so that the overall balance of payments is expected to revert back to a surplus of about US$47 million. Gross international reserves are expected to rise by about US$100 million, to five months of imports of goods and services.
12. With regard to the exchange rate, the government is of the view that the depreciation of the real effective exchange rate during 1998/99 largely restored the competitiveness of noncoffee exports lost during the previous four years. While the government will continue to pursue a market-determined exchange rate policy, it remains firmly committed to stability in the foreign exchange market, which will be sought through the implementation of prudent monetary and fiscal policies. In order to finalize the legal framework for the liberalization of international capital transactions that was announced in July 1997, the new Foreign Exchange Bill, which will supersede the Exchange Control Act and formalize the legal framework for the liberalization of international capital transactions, will be presented to parliament no later than June 2000.
13. The authorities will continue their prudent external debt-management policy, focusing on grants and highly concessional loans. Consistent with this policy, the government will adhere to a ceiling of US$10 million on new nonconcessional external borrowing contracted or guaranteed by the government and the BOU. The government will also work with the international financial community to achieve a more sustainable debt burden in the context of the enhanced HIPC Initiative. In this regard, Uganda will finalize the signing of all agreements with Paris Club members related to the restructuring agreement of April 1998 and continue its efforts to obtain comparable treatment from non-Paris Club creditors. Subject to the conclusion of the revised debt sustainability analysis (DSA), conducted jointly by the authorities and the staffs of the Fund and the World Bank, Uganda will promptly start consultations with creditors to reconcile the stock of external debt outstanding at end-June 1999.
14. Financial sector policies. The government is pressing ahead with decisive measures to strengthen the banking sector. Consistent with the policies set out in the July 1999 MEFP, the BOU concluded on-site examinations of five banks that were not in full compliance with minimum capital requirements as at end-March 1999. As a prior action for Executive Board consideration of the third arrangement under the ESAF, the BOU will intervene in the two banks that have not complied with their 1998 agreements with the BOU to recapitalize by June 1999. The BOU would also either enter into remedial memoranda of understanding with two other insolvent banks or intervene in these two banks as a prior action for the completion of the first review of the third annual arrangement. The new Financial Institution Statute will be introduced in parliament by June 2000. In the interim, the BOU will vigilantly enforce the provisions of the existing statute. Any bank not in full compliance with capital requirements, as reported in the quarterly off-site reports, will be subject to an on-site examination no later than the end of the subsequent quarter. Any bank that is not in compliance with all prudential standards will either operate in accordance with a memorandum of understanding leading to correction of the deficiencies within six months, or will be promptly intervened. To strengthen its supervisory capacity, the BOU will hire 15 new staff in 1999/2000 and is receiving technical assistance from bilateral and multilateral donors for systematic training of bank examiners. The BOU will continue to stringently adhere to its policy of providing liquidity support only to solvent banks. A bank requiring liquidity support for a period of more than two consecutive weeks will be subject to an immediate on-site examination to confirm that it is solvent. Finally, the mandate of the Non-Performing Asset Recovery Trust (NPART) has been extended beyond its current September 1999 sunset date for two more years.
15. With regard to the three banks closed in 1998/99, the government has undertaken to reimburse all private deposits, for a total of U Sh 136 billion. In addition, the BOU had lent a total of U Sh 27 billion to the banks prior to closure. A total of U Sh 43 billion in deposits are covered by the Deposit Insurance Fund (DIF), and the government will pay uninsured deposits totaling U Sh 93 billion. The U Sh 43 billion insured by the DIF is being covered by its own resources of U Sh 9 billion, U Sh 32 billion in liquid assets of the closed banks, and a U Sh 2 billion loan from the BOU, which will be repaid out of the liquidation proceeds and future DIF assessments levied on the commercial banks. The government's exposure of U Sh 93 billion for payment of the uninsured deposits and the BOU's exposure to loss from the U Sh 27 billion in loans outstanding at the time of the closure of the banks may be reduced by the proceeds from the liquidation of the failed banks. Total recoveries will be determined only at the conclusion of the liquidations, but are currently estimated to be in the range of U Sh 30 billion, in residual nonliquid assets. The deposits in excess of the DIF limit are being settled through a combination of cash payments by the BOU, non-interest-bearing BOU promissory notes issued to large depositors, and the transfer of deposits to sound banks. When these notes and those held by large depositors are redeemed, the liquidity injection will be sterilized by issuing appropriate securities. The gross recurrent interest cost of this operation (excluding BOU's U Sh 27 billion exposure) is projected at about U Sh 7 billion in 1999/2000 and U Sh 9 billion a year thereafter.
16. With regard to Uganda Commercial Bank Ltd. (UCBL), the government's legal case against Westmont Land (Asia) to regain full ownership of UCBL is currently under arbitration in international court. The government remains committed to fully privatizing UCBL. In the interim, UCBL will remain under the administrative control of the BOU, which will establish terms of reference for the interim management of the bank to protect the net worth of the bank. The terms of reference will, among other things, prescribe limits on capital expenditures and on advancing new credit facilities. Transmission of these terms of reference to the interim management of the bank constitutes a prior action for the third annual arrangement. A diagnostic study of the UCBL is being finalized and the government will consider options, contingent on the outcome of the legal proceeding against Westmont, to restructure UCBL in preparation for reprivatization.
17. Trade reform. The government remains committed to further liberalizing and stream-lining the trade regime, in particular by reducing the temporary additional duties (by one-third) on beer and soft drinks by March 2000, and on cigarettes and tobacco products (by one-half) by June 2000. The surcharges on beer and soft drinks will be eliminated by March 2001, and those on cigarettes and other tobacco products will be eliminated by June 2001. The government is committed to avoiding tariff increases or discriminatory excises on imports from third countries as a result of further intra-East African Community (EAC) tariff liberalization. The existing discriminatory excises of 10 percent imposed on selected imports, as well as the recently imposed additional protection on textiles and sugar, will be phased out consistent with the framework for trade liberalization to be undertaken in the context of the EAC.
18. Privatization and public enterprise reform. In the area of privatization and public enterprise reform, the government will focus its efforts on implementing measures to enhance the efficiency of the privatization process, expedite the privatization of key public enterprises, and strengthen monitoring of the financial performance of the remaining parastatals, particularly public utilities. The government's proposed amendments to the Public Enterprise Reform and Divestiture (PERD) statute were submitted to a parliamentary committee in August 1999, including a proposal to the bill's provisions for accountability of public officers; the amended legislation is expected to be considered soon by parliament. Direct negotiations with South African Airlines/Alliance for the sale of Uganda Airlines Corp. (UAC) are far advanced, and Ugandan Clays Ltd. (UCL) is expected to be listed on the stock market in October 1999. Completion of the prequalification process and the issuing of invitations to bid for Uganda Telecommunications Ltd. (UTL) would constitute a structural benchmark under the proposed program, as would the sale of Masindi Hotel, SAIMMCO, Uganda Spinning Mills, and all but 10 percent of residual shares in British-American Tobacco (BAT), which will subsequently be offered to the public through the securities exchange. With regard to the Uganda Electricity Board (UEB), all legislation necessary for preparing the enterprise for privatization has been submitted to parliament, and negotiations with a privately funded independent power producer are well advanced. With funding from the World Bank, restructuring and privatization advisors will be appointed by December 31, 1999 to prepare comprehensive recommendations regarding the unbundling of the UEB into separate corporate entities and the modalities for private sector participation in the sector. The appointment of these advisors would constitute a prior action for the completion of the first review. The cabinet will consider the principles underlying establishment of a single independent multisector utility regulatory agency and propose legislation to parliament in 1999/2000. In order to bring greater transparency and accountability to the financial operations of public enterprises, the government will set detailed operational and financial performance contracts with managers of the three largest public enterprises (UEB, Uganda Railways Corp. (URC), and National Water and Sewerage Corporation (NWSC)) and submit the targets to parliament, along with the 2000/01 budget. New appointment letters will be sent to the managers specifying their responsibilities and reporting requirements, as well as penalties for noncompliance.
19. Civil service reform and pensions. The government expects to meet the June 1999 benchmark of 51,640 staff in the "number-limited" public service (excluding primary school teachers) agreed under the 1998/99 program by October 31, 1999. These staffing reductions will include all public servants whose responsibilities have been transferred to the districts. Until the restructuring is complete, the number-limited public service (excluding primary school teachers) will be maintained at no more than 51,640 (the level to be achieved by October 1999) as a continuous structural performance criterion under the program. Furthermore, the government will in 1999/2000 propose to the cabinet recommendations for restructuring the nontraditional civil service establishments (commissions, secondary and tertiary education, police, prisons, delegated staff, and other autonomous and semiautonomous bodies). All properly appointed primary school teachers will be placed on the Ministry of Public Service (MPS) payroll by March 2000, and all outstanding verified arrears will be paid at that time. With regard to pension reform, the MPS will submit for cabinet approval, by March 2000, proposals to reform the pension system, including revisions in the benefit formula and the extent of validating pensions of public servants who retired prior to 1996.
20. Governance and transparency. Good governance is a core component of the PEAP, and the government's PAF contains provisions to fund enhanced surveillance over the use of public funds earmarked for priority under the antipoverty program. The poor have consistently cited corruption by officials as a major barrier to their access to public services, and manufacturers have cited it as a major impediment to investment and economic growth. The increase in budgetary resources for the implementation of the government's anticorruption strategy has enabled the office of the Inspector General of Government to increase its professional staff from 40 to 100, and to establish regional offices to investigate allegations of corruption at the district level. The cabinet will submit to parliament for first reading an amended Leadership Code that contains provisions for mandatory disclosure of assets and income of public officials by March 2000. Legislation requiring the gazetting of all government contract awards and establishing an autonomous National Procurement Policy Unit is being prepared, and cabinet approval is expected by June 2000. Moreover, the government participated in the Fund's exercise on transparency practices and consented to the dissemination of the report in the public domain. The government will follow up on the key areas noted in this report where further improvements in transparency and observance of international standards could be made.
21. Statistical issues. The government has taken important steps to improve the collection, compilation, and dissemination of key economic, financial, and social data. Funding for the Uganda Bureau of Statistics (UBS) has been substantially increased, and key positions in the bureau are currently being filled. The UBS recently initiated an expanded integrated household survey covering 14,000 households. The survey will provide key information on recent trends in poverty, as well as information on agricultural production. The UBS has sought technical assistance in expanding the coverage and improving the timeliness of national accounts. The BOU is now compiling banking statistics based on an enhanced reporting form that has resulted in a substantial improvement in the quality of monetary statistics and will improve the off-site monitoring activities of its banking supervision department. The Ministry of Finance and Economic Planning was not able to resume reporting of government finance statistics (GFS) for publication in the GFS Yearbook by September 1999, but it will make every effort to do so by March 2000 and will be seeking technical assistance from the Fund in this regard. The government has made substantial strides in improving the quality and timeliness of key social indicators. Finally, the PMU will be strengthened, with a view to also expanding the production of timely data with which to assess progress in reducing poverty and linking policy decisions to poverty outcomes.
22. To confirm the government's commitment to the program and policies outlined in this memorandum, the government will take a number of actions before presenting the request for the third annual arrangement to the Fund Board. Prior actions would be taken in the fiscal and financial sectors, as set forth in Table 2. Two reviews are envisaged under the proposed program, the first would be scheduled for completion in April/May 2000, and the second in October/November for 2000. The proposed quantitative benchmarks and performance criteria are presented in Table 3. Structural performance criteria and benchmarks, as well as prior actions for the completion of the first review, are listed in Table 4.