{
  "title": "IMF Executive Board Concludes the Fourth Review Under the Extended Credit Facility Arrangement with Uganda",
  "publication": "IMF News, June 21, 2023",
  "sourceUrl": "https://www.imf.org/en/news/articles/2023/06/21/pr23223-imf-executive-board-concludes-the-review-under-the-ecf-arrangement-with-uganda",
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  "summary": "The ECF Arrangement for Uganda for a total of SDR 722 million (200 percent of quota) or about US$1billion was approved by the Executive Board on June 28, 2021 (see Press Release 21/197), aiming to support the near-term response to the COVID-19 pandemic and boost more inclusive private sector-led long-term growth. Reforms focus on creating fiscal space for priority social spending, preserving debt sustainability, strengthening governance and reducing corruption, and enhancing the monetary and financial sector frameworks.",
  "publishDate": "2023-06-21",
  "sections": [
    {
      "heading": "Review outcome and financing",
      "content": "- The Executive Board concluded the fourth review of Uganda’s Extended Credit Facility (ECF) Arrangement.\n- A waiver of nonobservance was granted for a performance criterion on the ceiling on net credit to the government from the Bank of Uganda (BoU).\n- The completion of the fourth review enables the immediate disbursement of the equivalent of SDR 90.25 million (about US$ 120 million).\n- Aggregate disbursement under the ECF arrangement now stands at SDR 541.5 million (about US$750 million).\n- The ECF Arrangement for Uganda totals SDR 722 million (200 percent of quota) or about US$1billion and was approved on June 28, 2021."
    },
    {
      "heading": "Macroeconomic projections and recent revisions",
      "content": "- Real GDP growth:\n  - Projected at 5.5 percent in FY 22/23.\n  - Projected at 6 percent in FY 23/24.\n- Inflation:\n  - Has been declining and is expected to reach the Bank of Uganda’s medium-term target of 5% core inflation by end-2023.\n- Near-term outlook changes:\n  - Growth in FY 22/23 has been revised up slightly.\n  - Inflation projections are marked down for FY 23/24.\n- Factors supporting the improved near-term outlook:\n  - More favorable weather conditions on domestic harvests.\n  - Softening of global commodity prices and easing of global demand-supply imbalances.\n  - Lagged effects of monetary and fiscal policy tightening."
    },
    {
      "heading": "Risks to the outlook",
      "content": "- Elevated risks include:\n  - Further tightening of external financial conditions.\n  - A renewed pickup in inflation leading to additional monetary tightening and higher borrowing costs.\n  - Stronger-than-expected drag of higher borrowing costs on private sector credit and investment.\n  - Potential negative impact on exports from the conflict in Sudan.\n  - A stronger tightening of global financial conditions could constrain syndicated loans and weigh on financial sector stability, given that foreign exchange credit accounts for around 30 percent of bank loans.\n  - The signing into law of the ’Anti-Homosexuality Bill, 2023’ could have a larger-than-anticipated impact on the availability of grants and external loans from development partners, as well as Foreign Direct Investment (FDI) flows and tourism."
    },
    {
      "heading": "Policy priorities and structural reforms",
      "content": "- Fiscal and monetary stance:\n  - Fiscal consolidation and tight monetary policy remain essential to keep debt on a sustainable path, reduce the current account deficit and protect foreign exchange buffers.\n  - Exchange rate flexibility remains crucial to preserve external buffers.\n- Revenue and public financial management:\n  - Full implementation of the Domestic Revenue Mobilization Strategy (DRMS), including additional tax administrative measures, is crucial to help maintain the debt-to-GDP ratio on a declining path and allow for an increase in social spending over the medium term.\n  - Increasing the pace of Public Financial Management (PFM) reforms is essential to enhance the capacity to execute social spending in a timely manner.\n  - The tax exemption rationalization plan remains an important component of the revenue mobilization effort.\n- Financial sector and stability:\n  - Safeguarding financial stability and strengthening the supervisory framework remain paramount.\n  - The banking system is well-capitalized and liquidity has rebounded, but the asset quality of some banks has deteriorated.\n  - The BoU should stand ready to resume tightening if signs emerge of a slower-than-expected disinflation.\n- Governance, inclusion, and climate:\n  - Priorities include strengthening the anti-corruption framework and the AML/CFT regime, advancing the financial inclusion agenda, and climate adaptation measures.\n  - Authorities should sustain efforts to improve transparency of implementation of the asset declaration framework including sanctions enforcement for violations.\n- Social spending:\n  - Efforts to increase social spending, alongside revenue mobilization and governance reforms, will improve prospects for achieving more inclusive, sustainable, private sector led long-term growth."
    },
    {
      "heading": "Key quantitative outcomes and indicators (Table 1: Uganda: Selected Economic Indicators, FY2020/21-FY2023/24)",
      "content": "- Real GDP Growth (%)\n  - FY2020/21: 3.5\n  - FY2021/22: 4.7\n  - FY2022/23: 5.5\n  - FY2023/24: 6.0\n- Headline Inflation - average (%)\n  - FY2020/21: 2.5\n  - FY2021/22: 3.4\n  - FY2022/23: 9.2\n  - FY2023/24: 5.7\n- Core Inflation - average (%)\n  - FY2020/21: 3.2\n  - FY2021/22: 7.7\n  - FY2022/23: 5.3\n- Revenue and grants (% of GDP)\n  - FY2020/21: 14.3\n  - FY2021/22: 14.1\n  - FY2022/23: 14.7\n  - FY2023/24: 15.8\n- Expenditure (% of GDP)\n  - FY2020/21: 23.7\n  - FY2021/22: 21.5\n  - FY2022/23: 19.8\n  - FY2023/24: 19.3\n- Primary Balance (% of GDP)\n  - FY2020/21: -6.7\n  - FY2021/22: -4.3\n  - FY2022/23: -1.9\n  - FY2023/24: -0.5\n- Fiscal Balance (% of GDP)\n  - FY2020/21: -9.4\n  - FY2021/22: -7.4\n  - FY2022/23: -5.1\n  - FY2023/24: -3.4\n- Public Debt (% of GDP)\n  - FY2020/21: 49.0\n  - FY2021/22: 50.6\n  - FY2022/23: 48.6\n  - FY2023/24: 47.8\n- Broad Money (% change)\n  - FY2020/21: 8.5\n  - FY2021/22: 10.0\n  - FY2022/23: 11.3\n  - FY2023/24: 11.2\n- Credit to Private Sector (% change)\n  - FY2020/21: 8.3\n  - FY2021/22: 11.0\n  - FY2022/23: 8.9\n  - FY2023/24: 10.4\n- Policy Rate, EOP (%)\n  - FY2020/21: 6.5\n  - FY2021/22: 7.5\n  - FY2022/23: …\n- Current Account Balance (% of GDP)\n  - FY2020/21: -9.5\n  - FY2021/22: -7.9\n  - FY2022/23: -8.6\n  - FY2023/24: -8.9\n- Reserves (in months of next year's imports)\n  - FY2020/21: 4.9\n  - FY2021/22: 4.1\n  - FY2022/23: 3.1\n- External Public Debt (% of GDP)\n  - FY2020/21: 31.6\n  - FY2021/22: 31.3\n  - FY2022/23: 30.9\n  - FY2023/24: 31.2\n- REER (% change)\n  - FY2020/21: 0.6\n  - FY2021/22: 3.7\n\nIMF Communications Department; Press Release No. 23/223. Washington, DC: June 21, 2023.\n\n---\n\n\n References\n\n- Uganda and the IMF\n- Press Releases\n- PRESS CENTER\n- Extended Credit Facility\n- Press Release 21/197\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2023/06/21/pr23223-imf-executive-board-concludes-the-review-under-the-ecf-arrangement-with-uganda"
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    "Published: June 21, 2023",
    "The Executive Board concluded the fourth review of Uganda’s Extended Credit Facility (ECF) Arrangement.",
    "A waiver of nonobservance was granted for a performance criterion on the ceiling on net credit to the government from the Bank of Uganda (BoU).",
    "The completion of the fourth review enables the immediate disbursement of the equivalent of SDR 90.25 million (about US$ 120 million).",
    "Aggregate disbursement under the ECF arrangement now stands at SDR 541.5 million (about US$750 million).",
    "The ECF Arrangement for Uganda totals SDR 722 million (200 percent of quota) or about US$1billion and was approved on June 28, 2021.",
    "Real GDP growth:",
    "Inflation:",
    "Near-term outlook changes:",
    "Factors supporting the improved near-term outlook:",
    "Elevated risks include:",
    "Fiscal and monetary stance:",
    "Revenue and public financial management:",
    "Financial sector and stability:",
    "Governance, inclusion, and climate:",
    "Social spending:",
    "Real GDP Growth (%)",
    "Headline Inflation - average (%)",
    "Core Inflation - average (%)",
    "Revenue and grants (% of GDP)",
    "Expenditure (% of GDP)",
    "Primary Balance (% of GDP)",
    "Fiscal Balance (% of GDP)",
    "Public Debt (% of GDP)",
    "Broad Money (% change)",
    "Credit to Private Sector (% change)",
    "Policy Rate, EOP (%)",
    "Current Account Balance (% of GDP)",
    "Reserves (in months of next year's imports)",
    "External Public Debt (% of GDP)",
    "REER (% change)",
    "[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/2023/Extended-Credit-Facility-ECF)",
    "[Press Release 21/197](https://www.imf.org/en/News/Articles/2021/06/28/pr21197-uganda-imf-executive-board-approves-ecf-arrangement-for-uganda)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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