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Africa > Uganda

You are looking at 21 - 30 of 92 items for :

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  • Foreign Exchange x
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Cover IMF Working Papers
When and Why Worry About Real Exchange Rate Appreciation? The Missing Link Between Dutch Disease and Growth
International Monetary Fund
We review the literature on Dutch disease, and document that shocks that trigger foreign exchange inflows (such as natural resource booms, surges in foreign aid, remittances, or capital inflows) appreciate the real exchange rate, generate factor reallocation, and reduce manufacturing output and net exports. We also observe that real exchange rate misalignment due to overvaluation and higher volatility of the real exchange rate lower growth. Regarding the effect of undervaluation of the exchange rate on economic growth, the evidence is mixed and inconclusive. However, there is no evidence in the literature that Dutch disease reduces overall economic growth. Policy responses should aim at adequately managing the boom and the risks associated with it.
Keywords:
WP; natural resource; DD effect; exchange rate appreciation; open economy; DD shock; real exchange rate; Dutch disease; growth; exchange rate overvaluation; exchange rate volatility; learning by doing; exchange rate intervention; DD phenomenon; undervalued exchange rate; Dutch disease effects; overvalued exchange rate; DD model; Real exchange rates; Natural resources; Exchange rates; Asia and Pacific; Caribbean; Sub-Saharan Africa
Cover IMF Working Papers
Measuring Financial Barriers Among East African Community Countries
Yi David Wang
This paper seeks to quantify existing financial barriers among East African Community (EAC) member countries based on analysis of each member country’s foreign exchange market. The primary contribution of this paper is the generation of an aggregate measure of financial barriers for the three relatively more advanced members (Kenya, Uganda, and Tanzania) using forward foreign exchange and interbank interest rate data. Its empirical results, which are corroborated by other evidence such as the levels of development of the financial markets and restrictions on capital flows, suggest that Kenya is the EAC’s most financially open country, followed by Uganda, and then Tanzania. The fact that the three countries exhibit different degrees of financial openness suggests that financial integration in the EAC region has a way to go.
Keywords:
WP; EAC country; foreign exchange market; exchange rate; dollar; Forward rates; foreign exchange; financial barrier; financial integration; EAC member; EAC currency; spot market; Kenya shilling; Currency markets; Interest rate parity; Currencies; Interbank rates; Global
Cover IMF Working Papers
The Macroeconomics of Medium-Term Aid Scaling-Up Scenarios
Mr. Rafael A Portillo
,
Mr. Andrew Berg
,
Jan Gottschalk
, and
Luis-Felipe Zanna
We develop a model to analyze the macroeconomic effects of a scaling-up of aid and assess the implications of different policy responses. The model features key structural characteristics of low-income countries, including varying degrees of public investment efficiency and a learning-by-doing (LBD) externality that captures Dutch disease effects. On the policy front, it distinguishes between spending the aid, which is controlled by the fiscal authority, and absorbing the aid - financing a higher current account deficit - which is influenced by the central bank's reserve accumulation policies. We calibrate the model to Uganda and run several experiments. We find that a policy mix that results in full spending and absorption of aid can generate temporary demand and real exchange rate appreciation pressures, but also have a positive effect on real GDP in the medium term, through higher public capital. Full spending with partial absorption, on the other hand, may stem appreciation pressures but can also induce adverse medium-term real GDP effects, through private sector crowding out. When aid is very inefficiently invested and there are strong LBD externalities, aid can be harmful, and partial absorption policies may be justified. But in this case, a welfare improving solution is to defer spending or - even better if possible - raise its efficiency.
Keywords:
WP; central bank; exchange rate; government spending
Cover IMF Working Papers
The Short-Run Macroeconomics of Aid Inflows: Understanding the Interaction of Fiscal and Reserve Policy
Luis-Felipe Zanna
,
Mr. Andrew Berg
,
Mr. Tokhir N Mirzoev
, and
Mr. Rafael A Portillo
We develop a tractable open-economy new-Keynesian model with two sectors to analyze the short-term effects of aid-financed fiscal expansions. We distinguish between spending the aid, which is under the control of the fiscal authorities, and absorbing the aid-using the aid to finance a higher current account deficit-which is influenced by the central bank's reserves policy when access to international capital markets is limited. The standard treatment of the transfer problem implicitly assumes spending equals absorption. Here, in contrast, a policy mix that results in spending but not absorbing the aid generates demand pressures and results in an increase in real interest rates. It can also lead to a temporary real depreciation if demand pressures are strong enough to threaten external balance. Certain features of low income countries, such as limited participation in domestic financial markets, make a real depreciation more likely by amplifying demand pressures when aid is spent but not absorbed. The results from our model can help understand the recent experience of Uganda, which saw an increase in government spending following a surge in aid yet experienced a real depreciation and an increase in real interest rates.
Keywords:
WP; central bank; exchange rate
Cover IMF Staff Country Reports
Uganda: Sixth Review Under the Policy Support Instrument and Request for an Extension of the Policy Support Instrument-Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Uganda.
International Monetary Fund
This paper discusses key findings of the Sixth Review for Uganda Under the Policy Support Instrument. Structural rigidities continue to pose challenges to macroeconomic management in Uganda. Persistent weaknesses in project implementation coupled with rigidities in domestic financial markets limited the scope for fiscal and monetary stimulus in 2008/09. Progress with structural reforms has been uneven and may not have kept pace with the needs raised by the public investment drive. Macroeconomic policies will continue to aim at overcoming infrastructure bottlenecks while mitigating the impact of external shocks on domestic activity.
Keywords:
ISCR; CR; liquidity management framework; headline inflation; management; market; Uganda's PSI; IMF's framework; program goal; X. exchange rate arrangement; fiscal year; NDP objective; monetary management; upstream JSAN; terms of trade; Public investment and public-private partnerships (PPP); Exchange rates; Infrastructure; Public investment spending; Global; Sub-Saharan Africa
Cover Departmental Papers
Foreign Exchange Reserve Adequacy in East African Community Countries
International Monetary Fund
The concomitant external shocks experienced in 2008-09 by the East African Community (EAC) countries of Kenya, Rwanda, Tanzania, and Uganda and stepped-up support by the IMF—including the SDR allocation—and other donors, are likely to arouse renewed interest in the question of the adequate level of international reserves. This paper discusses the evolution of reserve holdings in EAC countries and uses several tools for assessing reserve adequacy in the region. The analysis suggests that reserve levels in most cases seem to include safety buffers, and thus, do not require immediate action. However, the situation could become tighter if export recovery is delayed or export prices do not pick up. Over the medium term, the desirable reserve path should also be adapted to regional and international integration.
Keywords:
DPPP; DP; reserve; special drawing rights; EAC country; exchange rate; SDR allocation; EAC economy; coverage ratio; reserve coverage; IMF resource; Reserve positions; International reserves; Reserves accumulation; Capital flows; Assessing reserve adequacy (ARA); Sub-Saharan Africa; Global
Cover IMF Staff Country Reports
Uganda: Fifth Review Under the Policy Support Instrument and Request for Modification of Assessment Criteria: Staff Report; and Press Release
International Monetary Fund
This paper discusses key findings of the Fifth Review under the policy support instrument for Uganda. Strong fundamentals and prudent economic policies of the past give Uganda scope to implement measured countercyclical policies without undermining macroeconomic stability. Monetary policy has been gradually eased in the face of the dry-up in private external financing. In spite of the slowdown-induced shortfall in tax revenue, the fiscal authorities are committed to accelerate and improve execution of investment spending to provide a positive impulse to growth and remove critical bottlenecks.
Keywords:
ISCR; CR; PSI-supported program; IMF's framework; growth; financial system; Uganda's PSI; core inflation; financial crisis; FAD mission; Budget planning and preparation; International reserves; Credit; Global
Cover IMF Staff Country Reports
Kenya: Selected Issues and Statistical Appendix
International Monetary Fund
Like most Sub-Saharan African countries, Kenya’s economic growth appears to have been primarily driven by factor accumulation. The Selected Issues paper and Statistical Appendix for Kenya examines economic developments and policies. During the last two decades, Kenya has been plagued by pervasive problems of internal conflicts, constitutional crises, and corruption scandals. The governance agenda focuses on several reforms, including upgrading the public budget and financial management systems, strengthening the anticorruption institutions, and improving the judicial framework.
Keywords:
ISCR; CR; Kenya; pay; inflation; TFP growth; wage bill; Reduced-Form inflation equation; development objective; governance agenda; growth performance; bill-to-domestic revenue; Tariffs; Total factor productivity; Wages; Real exchange rates; Imports; Sub-Saharan Africa; Middle East; Africa; East Asia; Central and Eastern Europe
Cover IMF Staff Country Reports
Uganda: 2008 Article IV Consultation and Fourth Review Under the Policy Support Instrument: Staff Report; Staff Supplement; Public Information Notice and Press Release on the Executive Board Discussion; and Statement by the Executive Director for Uganda
International Monetary Fund
The staff report for Uganda’s combined 2008 Article IV Consultation and Fourth Review Under the Policy Support Instrument is presented. Building on a foundation of two decades of sound policies, Uganda achieved an impressive economic performance, with high growth, low inflation, and steady poverty reduction. The deteriorating economic environment could expose weaknesses in banks’ risk management practices, gaps in home-host supervisory arrangements, operational risks as financial innovation outpaces banks’ systems and controls, and increasing risk appetite owing to intensifying competition from the surge of new banks.
Keywords:
ISCR; CR; pose downside risk; Uganda; debt; monetary policy; Uganda's economy; fiscal policy tool; IMF's framework; inflation trend; Exchange rates; Monetary statistics; Global; Sub-Saharan Africa; Africa
Cover Departmental Papers
Tanzania: The Story of an African Transition
Mr. Roger Nord
,
Mr. Yuri V Sobolev
,
Mr. David G. Dunn
,
Alejandro Hajdenberg
,
Mr. Niko A Hobdari
,
Samar Maziad
, and
Stéphane Roudet
This volume documents Tanzania’s remarkable turnaround from severe economic distress in 1985, and reviews the economic policies that twenty years later contributed to a successful reversal. Tanzania still faces many policy and reform challenges, despite the many recent economic achievements the country has experienced.
Keywords:
DPPP; DP; government; exchange rate; local government; enterprise; production function; trade diversion; monetary policy; private sector; foreign exchange; economic growth; Trade balance; Sub-Saharan Africa; Africa; Global; Southern Africa