## Public Information Notice: IMF Executive Board Concludes 2008 Article IV Consultation with Uganda _IMF News, February 17, 2009_ ## Source details **Canonical URL:** [Public Information Notice: IMF Executive Board Concludes 2008 Article IV Consultation with Uganda](https://www.imf.org/en/news/articles/2015/09/28/04/53/pn0923) ## Other formats - [Markdown version](/en/news/articles/2015/09/28/04/53/pn0923/index.md) - [Structured JSON version](/en/news/articles/2015/09/28/04/53/pn0923/index.json) - [Bundle manifest](/en/news/articles/2015/09/28/04/53/pn0923/bundle-manifest.json) ## Bibliographic details - Published: February 17, 2009 --- ### Background - Uganda's economy has been among the fastest-growing in Sub-Saharan Africa, building on two decades of sound policies that delivered high growth, low inflation, and steady poverty reduction. - In 2008 Uganda was affected by two major shocks: - Global surge in food and fuel prices, causing domestic inflation to rise above 15 percent. - Global economic downturn, likely reducing demand for Uganda's exports and the availability of financing for critical investment projects. - Near-term outlook and policy responses: - Economic growth in 2008/09 is expected to decline from recent high levels but remain robust at 7-7½ percent. - Core inflation is estimated to fall to 7 percent by June 2009, aided by lower international food and fuel prices. - Monetary policy is expected to support disinflation, with base money growing at a substantially lower pace than in 2007/08. - Fiscal deficit projected to widen somewhat in 2008/09 as development expenditures are scaled up; recourse to domestic financing expected to remain limited to less than 1 percent of GDP. - International reserves expected to drop moderately as demand for exports falls and other inflows (remittances, FDI) are scaled back. - Financial system relatively insulated from the global financial crisis, but slowdown could expose weaknesses in banks' credit portfolios. ### Executive Board Assessment - Directors commended authorities for sound macroeconomic management that underpinned the strong performance and poverty reduction. - Immediate challenges arise from the global downturn and reduced external financing; economy judged well-positioned due to low public debt, comfortable international reserves, and a relatively sound banking sector. - Medium-term constraints highlighted: - Infrastructure bottlenecks and dependence on subsistence agriculture impede growth. - Preparation of a new National Development Plan, including scaling-up government investment in infrastructure, was welcomed. - Need for careful evaluation of investment projects, including impacts on debt sustainability and international reserves. - Fiscal policy guidance: - Recognized strong fiscal performance in 2007/08. - Fiscal policy should maintain modest stimulus underlying the 2008/09 budget. - In case of revenue shortfall in 2008/09, authorities encouraged to avoid precipitous cuts in current expenditures, strengthen expenditure management, and prevent further accumulation of domestic arrears. - Supported authorities' medium-term target to increase tax revenues by ½ percent of GDP annually and welcomed consideration of a fiscal rule to underpin consolidation and prudent use of oil revenues. - Monetary and exchange rate policy guidance: - Monetary policy should sustain confidence in the currency while supporting disinflation. - Authorities encouraged to use falling international food and fuel prices to bring inflation back toward the medium-term objective. - Preconditions should be ensured before introducing a formal inflation-targeting framework. - Flexible exchange rate regime seen as effective; staff assessment that the real effective exchange rate is broadly in line with fundamentals. - Scope noted for targeted foreign exchange intervention to avoid excessive volatility. - Financial sector guidance: - Banking sector overall sound, banks well-capitalized and relatively insulated from global crisis. - Concerns about rapid expansion of bank lending and significant share of foreign-exchange loans in banks' portfolios. - Need to further strengthen prudential supervision and collaborate closely with home supervisors of banks operating in Uganda. ### Key Economic Indicators and Projections (selected figures) - Real GDP (percent change): - 2006/07: 8.6 - 2007/08: 9.8 - 2008/09 Est.: 9.5 - 2009/10 Proj.: 7.4 - 2010/11 Proj.: 7.3 - 2011/12 Proj.: 7.1 - 2012/13 Proj.: 8.0 - Headline inflation (end of period): - 2006/07: 4.4 - 2007/08: 10.2 - 2008/09 Est.: 12.5 - 2009/10 Proj.: 7.7 - 2010/11 Proj.: 5.0 - Core inflation (end of period): - 2008/09 Est.: 11.3 (note: table shows core inflation 11.3 in 2006/07 and 12.1 in 2007/08; 7.0 shown for 2009/10) - 2006/07: 11.3 - 2007/08: 12.1 - 2009/10 Proj.: 7.0 - Terms of trade (deterioration -): - 2006/07: 5.5 - 2008/09 Est.: -2.5 - 2010/11 Proj.: -3.6 - 2011/12 Proj.: -2.6 - Real effective exchange rate (depreciation -): - 2006/07: 2.7 - Broad money (M2, percent change): - 2006/07: 16.7 - 2007/08: 20.3 - 2008/09 Est.: 30.3 - 2009/10 Proj.: 18.0 - 2010/11 Proj.: 17.6 - 2011/12 Proj.: 19.0 - Domestic credit (percent change): - 2006/07: -6.4 - 2007/08: 7.2 - 2008/09 Est.: 22.0 - 2009/10 Proj.: 16.2 - 2010/11 Proj.: 14.9 - 2011/12 Proj.: 15.1 - 2012/13 Proj.: 16.0 - 2013 Proj.: 16.3 - Credit to the central government (percent of M3 at start of the period): - 2006/07: -17.2 - 2007/08: -7.6 - 2008/09 Est.: -4.3 - 2009/10 Proj.: 1.4 - 2010/11 Proj.: 2.9 - 2011/12 Proj.: 3.5 - Private sector credit (percent change): - 2006/07: 22.9 - 2007/08: 31.4 - 2008/09 Est.: 56.1 - 2009/10 Proj.: 26.4 - 2010/11 Proj.: 19.9 - Domestic investment (percent of GDP): - 2006/07: 22.1 - 2007/08: 24.1 - 2008/09 Est.: 23.6 - 2009/10 Proj.: 27.3 - 2010/11 Proj.: 29.7 - 2011/12 Proj.: 30.2 - 2012/13 Proj.: 31.0 - Public investment (percent of GDP): - 2006/07: 4.9 - 2007/08: 9.2 - 2008/09 Est.: 11.1 - 2009/10 Proj.: 11.2 - 2010/11 Proj.: 10.6 - 2011/12 Proj.: 10.9 - 2012/13 Proj.: 11.1 - Private investment (percent of GDP): - 2006/07: 17.2 - 2007/08: 19.2 - 2008/09 Est.: 18.1 - 2009/10 Proj.: 18.6 - 2010/11 Proj.: 19.1 - 2011/12 Proj.: 19.6 - 2012/13 Proj.: 20.1 - National savings (excluding grants, percent of GDP): - 2006/07: 14.8 - 2007/08: 15.4 - 2008/09 Est.: 14.5 - 2009/10 Proj.: 17.7 - 2010/11 Proj.: 20.2 - 2011/12 Proj.: 21.3 - 2012/13 Proj.: 20.9 - 2013 Proj.: 22.2 - Current account balance (including grants, percent of GDP): - 2006/07: -6.1 - 2007/08: -5.3 - 2008/09 Est.: -5.9 - 2009/10 Proj.: -5.5 - 2010/11 Proj.: -5.8 - 2011/12 Proj.: -5.4 - Net donor inflows (percent of GDP): - 2006/07: 6.5 - 2007/08: 6.4 - 2008/09 Est.: 6.3 - 2009/10 Proj.: 6.1 - Current account balance (excluding grants, percent of GDP): - 2006/07: -7.3 - 2007/08: -8.8 - 2008/09 Est.: -9.0 - 2009/10 Proj.: -9.6 - 2010/11 Proj.: -9.5 - 2011/12 Proj.: -9.3 - External debt (including Fund, percent of GDP): - 2006/07: 11.0 - 2007/08: 14.3 - 2008/09 Est.: 12.3 - 2009/10 Proj.: 13.9 - 2010/11 Proj.: 15.6 - 2011/12 Proj.: 17.1 - 2012/13 Proj.: 18.3 - External debt-service ratio (percent of exports of goods and nonfactor services, including Fund obligations): - 2006/07: 1.2 - 2007/08: 2.6 - 2008/09 Est.: 1.6 - 2009/10 Proj.: 1.8 - 2010/11 Proj.: 1.3 - 2011/12 Proj.: 1.1 - Government revenue (percent of GDP): - 2006/07: 12.6 - 2007/08: 13.3 - 2008/09 Est.: 13.0 - 2009/10 Proj.: 12.9 - 2010/11 Proj.: 13.4 - 2011/12 Proj.: 14.4 - Grants (percent of GDP): - 2006/07: 4.5 - 2007/08: 5.3 - 2008/09 Est.: 3.1 - 2009/10 Proj.: 3.0 - Total expenditure and net lending (percent of GDP): - 2006/07: -18.2 - 2007/08: -21.0 - 2008/09 Est.: -17.8 - 2009/10 Proj.: -20.6 - 2010/11 Proj.: -20.4 - 2011/12 Proj.: -20.8 - 2012/13 Proj.: -21.4 - 2013 Proj.: -21.6 - Overall balance (including grants, percent of GDP): - 2006/07: -1.1 - 2007/08: -2.4 - 2008/09 Est.: -2.1 - 2009/10 Proj.: -3.5 - 2010/11 Proj.: -4.0 - 2011/12 Proj.: -3.9 - 2012/13 Proj.: -3.8 - Overall balance (excluding grants, percent of GDP): - 2006/07: -5.6 - 2007/08: -7.7 - 2008/09 Est.: -4.8 - 2009/10 Proj.: -7.0 - 2010/11 Proj.: -6.9 - 2011/12 Proj.: -6.8 - Stock of domestic debt (percent of GDP): - 2006/07: 9.3 - 2007/08: 11.6 - 2008/09 Est.: 10.7 - 2009/10 Proj.: 5.9 - 2010/11 Proj.: 5.2 - Memorandum items: - Nominal GDP (U Sh billions): - 2006/07: 21,168 - 2007/08: 24,069 - 2008/09 Est.: 24,648 - 2009/10 Proj.: 30,782 - 2010/11 Proj.: 34,950 - 2011/12 Proj.: 38,363 - 2012/13 Proj.: 44,687 - 2013 Proj.: 51,287 - Average exchange rate (U Sh per US$): 1,778 - Treasury bill yield (percent): 9.4 (2006/07), 8.3 (2007/08) - Overall balance of payments (US$ millions): - 2006/07: 704 - 2007/08: 569 - 2008/09 Est.: 572 - 2009/10 Proj.: -92 - 2010/11 Proj.: 91 - 2011/12 Proj.: -78 - 2012/13 Proj.: -3 - 2013 Proj.: 61 - Gross foreign exchange reserves (months of next year's imports of goods and services): - 2006/07: 6.0 - 2007/08: 5.7 - 2008/09 Est.: 5.6 - 2009/10 Proj.: 4.7 *Public Information Notice (PIN) No. 09/23* --- ## References - [Uganda and the IMF](http://www.imf.org/external/country/UGA/index.htm) - [Public Information Notices](https://www.imf.org/en/news/searchnews) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/pn0923_