IMF Executive Board Concludes First Review Under the Extended Credit Facility Arrangement and 2021 Article IV Consultation with Uganda

IMF News, March 10, 2022

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Canonical URL: IMF Executive Board Concludes First Review Under the Extended Credit Facility Arrangement and 2021 Article IV Consultation with Uganda

The IMF Executive Board completed the first review of the Extended Credit Facility (ECF) Arrangement and 2021 Article IV Consultation with Uganda.
Approval of the first review enabled the immediate disbursement of about US$ 125 million for budget support.
Aggregate disbursement-to-date after the review: US$ 385 million.
Uganda’s ECF Arrangement: SDR 722 million (200 percent of quota) or about US$ 1 billion at the time of program approval on June 28, 2021.
Program aims: support near-term response to the COVID-19 pandemic and boost more inclusive private sector-led long-term growth.

All quantitative performance criteria were met, except one.
All but three structural benchmarks for 2021 were completed.
Notable governance and transparency progress:
- Institutionalizing the use of guidelines for prioritizing public investments and a framework for rationalizing tax expenditures.
- Tracking, auditing, and publishing of COVID-19 spending.
- Upgrading the anti-corruption legislation.
The authorities remain committed to the reform agenda despite a complex pandemic environment and some technical and legislative delays.

The second wave of the pandemic in July reduced the growth rebound and required additional fiscal support to cushion revenue shortfalls and expand cash transfers.
Real growth was revised down to 3.8 percent from 4.3 percent for FY21/22.
The fiscal deficit for FY21/22 will be higher than programmed at the time of ECF approval: 7.5 percent of GDP, up from 6.5 percent, to accommodate new demands on security and social sectors approved in the supplementary budget.
The social impact of the pandemic is profound, with potential medium-term scars on human capital.

Return to the programmed fiscal consolidation path to keep debt sustainable while creating more space for private sector credit.
Enhance domestic revenue mobilization.
Rationalize non-priority spending and shift the composition of spending towards priority social areas.
Improve budget preparation, including through fewer supplementary budgets.
Strengthen cash and arrears management.
Minimize financial stability risks; banking system is well-capitalized.
Continue monetary policy accommodation as fiscal support is removed, while remaining data dependent given uncertain external conditions.
Allow greater exchange rate flexibility and limit foreign exchange interventions to smoothing excessive exchange rate fluctuations.
Accelerate structural reforms to limit pandemic scars and progress toward middle-income status, including:
- Sustained governance reforms (regular audits of COVID-19 expenditures, publication of beneficial owners’ information, enhanced scrutiny of politically exposed persons).
- Accelerating financial inclusion.
- Fostering climate adaptation policies.
- Improving trade integration.

Output: Real GDP Growth (%)
- 2019/20 Act.: 2.9
- 2020/21: 3.4
- 2021/22 Proj.: 3.8
- 2022/23: 6.0
Prices:
- Headline Inflation - average (%): 2019/20 Act. 2.3; 2020/21 2.5; 2021/22 Proj. 3.5; 2022/23 4.6
- Core Inflation - average (%): 2019/20 Act. 2.2; 2020/21 3.0; 2021/22 Proj. 4.4
Central Government Finances (FY):
- Revenue (% GDP): 2019/20 Act. 13.2; 2020/21 14.4; 2021/22 Proj. 14.8; 2022/23 14.6
- Expenditure (% GDP): 2019/20 Act. 20.3; 2020/21 23.7; 2021/22 Proj. 22.2; 2022/23 19.3
- Primary Balance (% GDP): 2019/20 Act. -5.0; 2020/21 -6.7; 2021/22 Proj. -4.4; 2022/23 -1.8
- Fiscal Balance (% GDP): 2019/20 Act. -7.1; 2020/21 -9.4; 2021/22 Proj. -7.5; 2022/23 -4.7
- Public Debt (% GDP): 2019/20 Act. 41.9; 2020/21 49.1; 2021/22 Proj. 52.9; 2022/23 53.1
Money and Credit:
- Broad Money (% change): 2019/20 Act. 23.2; 2020/21 8.5; 2021/22 Proj. 9.1; 2022/23 11.5
- Credit to Private Sector (% change): 2019/20 Act. 8.8; 2020/21 8.3; 2021/22 Proj. 12.0; 2022/23 13.5
- Policy Rate, EOP (%): 2019/20 Act. 7.0; 2020/21 6.5; 2021/22 Proj. …
Balance of Payments:
- Current Account (% GDP): 2019/20 Act. -10.2; 2020/21 -8.0; 2021/22 Proj. -8.8
- Reserves (in months of next year's imports): 2019/20 Act. 3.9; 2020/21 4.2; 2021/22 Proj. 3.3
- External Debt (% GDP): 2019/20 Act. 28.6; 2020/21 31.7; 2021/22 Proj. 34.1
- Exchange Rate REER (% change): 2019/20 Act. 1.3

IMF Press Release No. 22/70, March 9, 2022