## IMF and Uganda Reach Staff-Level Agreement on the Combined Second and Third Reviews under the Extended Credit Facility Arrangement

_IMF News, December 21, 2022_

## Source details

**Canonical URL:** [IMF and Uganda Reach Staff-Level Agreement on the Combined Second and Third Reviews under the Extended Credit Facility Arrangement](https://www.imf.org/en/news/articles/2022/12/20/pr22453-uganda-reach-staff-level-agreement-combined-second-third-reviews-under-ecf-arrangement)

## Other formats

- [Markdown version](/en/news/articles/2022/12/20/pr22453-uganda-reach-staff-level-agreement-combined-second-third-reviews-under-ecf-arrangement/index.md)
- [Structured JSON version](/en/news/articles/2022/12/20/pr22453-uganda-reach-staff-level-agreement-combined-second-third-reviews-under-ecf-arrangement/index.json)
- [Bundle manifest](/en/news/articles/2022/12/20/pr22453-uganda-reach-staff-level-agreement-combined-second-third-reviews-under-ecf-arrangement/bundle-manifest.json)

## Bibliographic details
- Published: December 21, 2022

---

### Overview and key agreement terms
- IMF staff and the Uganda authorities reached a staff-level agreement to conclude the combined second and third reviews of the 36-month ECF-financed program.
- Upon completion of the Executive Board review, Uganda would have access to SDR 180.5 million, about US$240 million.
- Total IMF financial support under the ECF-financed program would reach SDR 451.25 million (equivalent to about US$ 625 million).
- The ECF was approved by the IMF Executive Board on June 28, 2021 for a total amount of SDR 722 million (about US$ 1 billion at the time of program approval).

### Economic outlook and risks
- Growth projections:
  - Growth is projected at 5.3 percent in FY22/23, 0.7 percentage point lower than at the time of the first review in March.
  - Medium-term prospects are expected to improve with oil production coming on board by FY24/25.
- Inflation expectations:
  - Headline inflation is expected to rise to 8.3 percent this fiscal year and is anticipated to decline thereafter.
  - Core inflation and headline inflation trajectories reflect elevated commodity prices, higher imported input costs, and monetary tightening.
- External and other risks:
  - Elevated risks include lower global growth, persistently higher inflation in advanced economies and associated tighter global financial conditions; an intensification of the Ebola outbreak; and more frequent disruptions in activity due to climate change.
  - The economic recovery is underway despite global demand and supply-chain shocks affecting inflation, growth, revenues, and spending needs.

### Policy actions and recommendations
- Monetary policy:
  - The Bank of Uganda (BoU) has tightened the policy rate in recent months and signaled readiness to take appropriate action to contain second-round effects of higher global prices.
  - Continued tightening is recommended to guide core inflation back to the target.
  - Continued exchange rate flexibility is recommended as an important shock absorber to help rebuild external buffers.
- Fiscal policy and revenue mobilization:
  - Revenue-based fiscal consolidation enshrined in the authorities’ Domestic Revenue Mobilization Strategy is crucial for keeping debt sustainable and funding Sustainable Development Goals.
  - Authorities adopted a plan to rationalize inefficient and costly tax expenditures.
  - Expenditure prioritization will continue; a small widening of the fiscal deficit this year, relative to the target set in the first review, is necessary to support the vulnerable while remaining focused on fiscal consolidation.
- Financial sector and safeguards:
  - The BoU is improving its supervisory framework; implementation of the Safeguards Assessment recommendations will help solidify independence.
  - A new risk management framework will address governance and contain risks.
  - The banking sector is characterized as well-capitalized, but existing vulnerabilities require continued monitoring and strengthening of financial stability.

### Structural reforms and governance
- Priority structural reforms include:
  - Strengthening the anti-corruption framework and the AML/CFT regime.
  - Improving the social safety net.
  - Advancing the financial inclusion agenda.
  - Adapting to climate change.
- Recent anticorruption and transparency steps:
  - The Companies Act was amended to prepare for implementation of a beneficial ownership register.
  - Tools for AML/CFT risk-based supervision for the financial sector are being developed and implemented.
  - Authorities published information on compliance statistics for asset declarations and on applications to access the declarations on the Inspectorate of Government’s website.

### Engagement and mission details
- Mission led by Mr. Malhar Nabar conducted a virtual mission to Uganda from October 31 - November 22, 2022; the concluding meeting was held on December 19, 2022.
- The staff team met with the Permanent Secretary and Secretary to the Treasury, Mr. Ggoobi; Deputy Governor of the BoU, Mr. Atingi-Ego; other BoU and senior government officials; and representatives of the private sector, civil society organizations, and development partners.

### Selected Economic Indicators, FY2020/21-FY2023/24
- Output
  - Real GDP Growth (%): FY2020/21: 3.5; FY2021/22: 4.7; FY2022/23: 5.3; FY2023/24: 6.0
- Prices
  - Headline Inflation - average (%): FY2020/21: 2.5; FY2021/22: 3.4; FY2022/23: 8.3; FY2023/24: 7.2
  - Core Inflation - average (%): FY2020/21: 3.2; FY2021/22: 7.5; FY2022/23: 6.8
- Central Government Finances
  - Revenue and Grants (% of GDP): FY2020/21: 14.3; FY2021/22: 14.1; FY2022/23: 15.1; FY2023/24: 15.5
  - Expenditure (% of GDP): FY2020/21: 23.7; FY2021/22: 21.5; FY2022/23: 20.2; FY2023/24: 19.0
  - Primary Balance (% of GDP): FY2020/21: -6.7; FY2021/22: -4.3; FY2022/23: -1.8; FY2023/24: -0.3
  - Fiscal Balance (% of GDP): FY2020/21: -9.4; FY2021/22: -7.4; FY2022/23: -5.1; FY2023/24: -3.5
  - Public Debt (% of GDP): FY2020/21: 49.0; FY2021/22: 50.6; FY2022/23: 50.9; FY2023/24: 49.6
- Money and Credit
  - Broad money (% change): FY2020/21: 8.5; FY2021/22: 10.0; FY2022/23: 14.5; FY2023/24: 12.6
  - Credit to Private Sector (% change): FY2020/21: 11.0; FY2021/22: 12.8
  - Policy Rate, EOP (%): FY2020/21: 6.5
- Balance of Payment
  - Current Account Balance (% of GDP): FY2020/21: -9.5; FY2021/22: -7.9; FY2022/23: -9.2; FY2023/24: -10.7
- Reserves
  - (in months of next year's imports): FY2020/21: 4.9; FY2021/22: 3.7; FY2022/23: 3.0; FY2023/24: 3.1
- External Public Debt (% of GDP): FY2020/21: 31.6; FY2021/22: 31.3; FY2022/23: 31.9; FY2023/24: 32.4
- Exchange Rate
  - REER (% change): FY2020/21: 0.6

*Press Release No. 22/453, December 21, 2022 — IMF Communications Department.*

---


## References

- [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)
- [IMF Executive Board on June 28, 2021](https://www.imf.org/en/News/Articles/2021/06/28/pr21197-uganda-imf-executive-board-approves-ecf-arrangement-for-uganda)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2022/12/20/pr22453-uganda-reach-staff-level-agreement-combined-second-third-reviews-under-ecf-arrangement_