## IMF Executive Board Approves US$1 billion ECF Arrangement for Uganda

_IMF News, June 28, 2021_

## Source details

**Canonical URL:** [IMF Executive Board Approves US$1 billion ECF Arrangement for Uganda](https://www.imf.org/en/news/articles/2021/06/28/pr21197-uganda-imf-executive-board-approves-ecf-arrangement-for-uganda)

## Other formats

- [Markdown version](/en/news/articles/2021/06/28/pr21197-uganda-imf-executive-board-approves-ecf-arrangement-for-uganda/index.md)
- [Structured JSON version](/en/news/articles/2021/06/28/pr21197-uganda-imf-executive-board-approves-ecf-arrangement-for-uganda/index.json)
- [Bundle manifest](/en/news/articles/2021/06/28/pr21197-uganda-imf-executive-board-approves-ecf-arrangement-for-uganda/bundle-manifest.json)

## Bibliographic details
- Published: June 28, 2021

---

### Arrangement and Financing Details
- Approved a 36-month arrangement under the Extended Credit Facility (ECF) for Uganda equivalent to SDR722 million (200 percent of quota or about US$1 billion).
- Approval enables immediate disbursement of about US$258 million, usable for budget support.
- This follows Fund emergency support under the Rapid Credit Facility (RCF) in May 2020 of SDR361 million (100 percent of quota or US$491.5 million).

### Economic impact of COVID-19 and Near-Term Outlook
- The COVID-19 pandemic reversed decade-long gains in poverty reduction, deteriorated fiscal balances, and put pressure on external buffers.
- A mild recovery is underway in some sectors.
- Economic growth in FY 21/22 is expected to reach 4.3 percent before returning to pre-pandemic rates of 6-7 percent in the medium term.
- The outlook remains highly uncertain, with risks tilted to the downside, including from a resurgence of tighter containment measures linked to higher COVID-19 positivity rates.

### Program Focus and Structural Reforms
- The three-year financing package will:
  - Support the short-term response to the COVID-19 crisis.
  - Help sustain a post-crisis inclusive recovery.
- Reforms will focus on:
  - Creating fiscal space for priority social spending.
  - Preserving debt sustainability.
  - Strengthening governance.
  - Enhancing the monetary and financial sector framework.
- The authorities’ program, enshrined in the third National Development Plan (NDPIII), is built around:
  - Private sector-led inclusive growth.
  - Public sector reforms to strengthen governance and transparency.
  - Multi-year fiscal consolidation while increasing priority and high-quality infrastructure spending.
- Specific program measures cited:
  - Increase domestic revenue (Domestic Revenue Mobilization Strategy).
  - Foster public sector efficiency and strengthen governance, including preparing the ground for sound management of oil revenues.
  - Better management of public investment, control of domestic arrears and advances in cash management.
  - Strengthen the monetary policy and financial sectors frameworks while fostering development, including through financial inclusion.

### IMF Policy Guidance and Recommendations (from Mr. Tao Zhang)
- Fiscal policy:
  - Fiscal consolidation in the first year should be appropriately based on both revenue and expenditure measures to stabilize the public debt ratio while increasing social spending, including for vaccines.
- Debt management:
  - Prudent debt management is important to reduce vulnerabilities, given Uganda’s moderate risk of debt distress.
  - Seek concessional financing and pursue relief under the Debt Service Suspension Initiative.
  - Contingency plans should be in place to help mitigate risks.
- Monetary and financial sector policy:
  - An accommodative monetary policy stance remains appropriate.
  - The exchange rate should continue to function as a shock absorber.
  - Efforts to increase central bank independence should be sustained.
  - Consider flexible use of banks’ capital buffers to address COVID-19 uncertainties.
  - Minimize financial stability risks through strict adherence to accounting and prudential standards, and modernize the banking resolution and emergency liquidity assistance frameworks.
- Governance and inclusion:
  - Advance governance reforms to support transparency and private sector development.
  - Further enhance the AML/CFT framework and strengthen the accountability of high-level officials.
  - Promote human capital development and financial inclusion, including through wider credit bureau coverage and collateral requirements.
  - Accelerate digitalization to enhance development and inclusion efforts.

### Selected Key Statistics and Figures
- SDR722 million (200 percent of quota or about US$1 billion) — ECF arrangement amount.
- About US$258 million — immediate disbursement enabled by the ECF approval.
- SDR361 million (100 percent of quota or US$491.5 million) — RCF support in May 2020.
- 36-month — duration of the ECF arrangement.
- FY 21/22 growth expected to reach 4.3 percent.
- Medium-term growth expected to return to 6-7 percent.

*IMF Press Release No. 21/197, June 28, 2021.*

---


## References

- [https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)
- [The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)
- [Uganda and the IMF](http://www.imf.org/external/country/UGA/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Extended Credit Facility](https://www.imf.org/en/About/Factsheets/Sheets/2016/08/02/21/04/Extended-Credit-Facility)
- [Rapid Credit Facility](https://www.imf.org/en/About/Factsheets/Sheets/2016/08/02/21/08/Rapid-Credit-Facility)
- [No 20/206](https://www.imf.org/en/News/Articles/2020/05/06/pr20206-uganda-imf-executive-board-approves-us-million-disbursement-address-the-covid-19-pandemic)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2021/06/28/pr21197-uganda-imf-executive-board-approves-ecf-arrangement-for-uganda_