News Brief: IMF Completes Uganda Review under PRGF and Approves US$11 Million Loan
March 26, 2001
The Executive Board of the International Monetary Fund (IMF) today completed the second review of Uganda's performance under the third annual arrangement under the Poverty Reduction and Growth Facility (PRGF). This will enable Uganda to draw SDR 8.9 million (about US$11 million) immediately from the IMF.
The three-year PRGF arrangement was approved on November 10, 1997, in a total amount of SDR 100.4 million (about US$127 million). On the occasion of the first review of the third annual arrangement on September 6, 2000, an extension of the PRGF arrangement to end-March 2001 was approved.
The Executive Board also reviewed today Uganda's Poverty Reduction Strategy Paper Progress Report, which outlines the country's recent progress in implementing the Poverty Eradication Action Plan.
Following the Board discussion on Uganda, Shigemitsu Sugisaki, Deputy Managing Director and Acting Chairman, said:
"Uganda has achieved significant progress in implementing a broad-based poverty reduction strategy, linking budgetary outlays to explicit outcome targets, and setting up mechanisms to monitor progress in achieving the targets of the strategy. The authorities are to be commended for their recently completed Poverty Reduction Strategy Paper (PRSP) Progress Report, which indicates that the incidence of poverty has declined substantially. However, the rising inequality and the increasing incidence of poverty in Northern Uganda are a matter of concern. The authorities are therefore encouraged to continue their efforts to resolve the security problems, which constrain economic activity and the delivery of social services to the north. In view of the central role that districts play in the implementation of the poverty reduction program, it is also essential that the authorities develop an efficient, effective, and transparent public service delivery system at the district level.
"Prudent macroeconomic management has helped to keep the 2000/01 program on track and preserve budgetary allocations for poverty reduction programs in the face of a sharp deterioration in the terms of trade. Budgetary management was helped by close monitoring of expenditure in the context of the Commitment Control System (CCS), and the authorities are encouraged to strictly enforce all the provisions under the CCS, including the penalties for noncompliance.
"Uganda is committed to improving revenue performance, which is essential to the preservation of key development expenditures and the long-run viability of the poverty reduction strategy. Strengthening the capacity of the Uganda Revenue Authority is a critical step toward this objective.
"Significant progress has been made in addressing the problems in the banking system and strengthening the bank supervision capacity of the Bank of Uganda. To build on this progress, an early enactment of the new Financial Institutions Bill and strict enforcement of banking regulations and the law are needed.
"Further progress has been made in trade liberalization, including the recent removal of the special protection accorded to the textile industry, and the authorities are encouraged to complete the trade reform agenda, by eliminating the discriminatory excises on selected imports," Mr. Sugisaki said.