Washington, DC – March 9, 2022: The Executive Board of the International Monetary Fund completed the first review of the Extended Credit Facility (ECF) Arrangement and 2021 Article IV Consultation[1]with Uganda. The completion of the first review allowed an immediate disbursement equivalent to about US$ 127 million for budget support, bringing the aggregate disbursement-to-date to US$ 385 million.
Uganda's ECF Arrangement for a total of SDR 722 million (200 percent of quota) or about US$ 1 billion at the time of program approval on June 28, 2021 (seePress Release 21/197), is aimed at supporting the near-term response to the COVID-19 pandemic and boosting more inclusive private sector-led long-term growth. Reforms focus on creating fiscal space for priority social spending, preserving debt sustainability, strengthening governance, and enhancing the monetary and financial sector frameworks.
The authorities have skillfully managed the second wave of the pandemic in July last year, which has however implied a lower growth rebound, and some additional fiscal support to cushion the revenue shortfall from the lockdown and expand cash transfers to the vulnerable. Real growth was revised down to 3.8 percent from 4.3 percent for FY21/22. The fiscal deficit will be higher than programmed at the time of the ECF approval (7.5 percent of GDP, up from 6.5 percent) to accommodate new demands on security and social sectors approved in the supplementary budget. The social impact of the pandemic is, however, profound, with deep scars on human capital potentially persisting over the medium term.
In spite of a challenging environment and some technical and legislative delays, all quantitative performance criteria were met, and the reform agenda implementation is progressing. Of note, progress was made in strengthening fiscal transparency, the budgetary planning framework and the governance framework by: (i) institutionalizing the use of guidelines for prioritizing public investments and a framework for rationalizing tax expenditures, (ii) tracking, auditing, and publishing of COVID-19 spending and (iii) upgrading the anti-corruption legislation, among others.
The full press release, including the Executive Board Assessment, will be posted in due course.
[1]Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
