## IMF Executive Board Completes the Seventh Review Under the Policy Support Instrument for Uganda

_IMF News, January 10, 2017_

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## Bibliographic details
- Published: January 10, 2017

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### Review outcome and program status
- On January 5, the Executive Board of the International Monetary Fund (IMF) completed the seventh review of Uganda’s economic program under the Policy Support Instrument (PSI).
- The Board’s decision was taken on a lapse of time basis.
- The Board granted a waiver of the nonobservance of the end-June 2016 assessment criterion on the overall deficit of the central government.
- The PSI for Uganda was approved by the Board on June 28, 2013, and a one-year extension was approved on June 6, 2016.
- The PSI is an instrument of the IMF designed for countries that do not need balance of payments financial support; it signals the Fund's endorsement of a member's policies.

### Recent macroeconomic performance and projections
- Growth slowed marginally to 4.8 percent in FY15/16.
- Growth is projected to nudge up to 5 percent in FY16/17.
- The current account deficit improved by 1 percentage point to 5.9 percent of GDP.
- The Shilling has stabilized after a sharp depreciation in 2015.

### Program implementation and policies
- Program performance under the PSI has been mixed.
- Tight monetary policy in 2015 helped contain inflation in the target range.
- The Bank of Uganda (BoU) started an easing cycle in April 2016.
- Reserve cover remains adequate.
- Fiscal revenue and deficit targets were missed, reflecting lower-than-expected growth and election effects.
- Investment spending fell short, while current expenditure overshot.
- Structural reforms have progressed, albeit with some delays.

### Financial sector and debt outlook
- The banking sector remains overall well capitalized, despite elevated non-performing loans.
- The BoU took over an undercapitalized bank and is identifying a strategic investor.
- Uganda remains at a low risk of debt distress.
- The scaling-up of infrastructure investment implies a temporary increase in debt, putting a premium on domestic revenue mobilization and ensuring that public investment yields the intended growth dividend.

### Priorities and policy recommendations going forward
- Close cooperation with the Financial Action Task Force to ensure Uganda’s swift exit from its “gray” list.
- Strengthen domestic arrears monitoring.
- Amend the Bank of Uganda Act to reinforce central bank independence.
- Enhance public investment management to achieve the desired growth dividend from infrastructure investment.

*Source: Press Release No. 17/04, IMF Communications Department, January 10, 2017.*

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## References

- [The Executive Board](http://www.imf.org/external/np/sec/memdir/eds.aspx)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Press Release No. 13/78](http://www.imf.org/external/np/sec/pn/2013/pn1378.htm)
- [Press Release No. 16/263](http://www.imf.org/external/np/sec/pr/2016/pr16263.htm)
- [http://www.imf.org/external/np/exr/facts/psi.htm](http://www.imf.org/external/np/exr/facts/psi.htm)
- [www.imf.org/uganda](http://www.imf.org/uganda)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2017/01/10/pr1704-imf-executive-board-completes-the-seventh-review-under-the-policy-support_