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Africa > Uganda

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Cover IMF Staff Country Reports
Uganda: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Uganda
International Monetary Fund. African Dept.
The 2024 Article IV Consultation highlights that Uganda has navigated the post pandemic recovery well due to sound macroeconomic policies. The economic recovery is strengthening with low inflation, favorable agricultural production, and strong industrial and services activity. While public debt is sustainable, low tax revenues constrain Uganda’s fiscal policy space. Strengthening domestic revenue mobilization and budgetary and cash management practices are key to securing a durable fiscal space. The Bank of Uganda’s tight monetary policy stance has helped anchor inflation expectations and counter external sector pressures. Going forward, monetary policy should remain data driven to ensure price stability and further financial deepening. Continued flexibility of the exchange rate is important to build up adequate foreign exchange reserves. Uganda should continue its efforts to create fiscal space through revenue mobilization and better expenditure discipline, vigilant monetary policy, and exchange rate flexibility, using future oil revenue to address growth impediments and improve social development while advancing governance reform and financial inclusion. Addressing governance deficiencies and regulatory burdens and enhancing regional trade integration are critical to unlocking Uganda’s growth potential.
Keywords:
IMF staff calculation; NDP IV; inflation expectation; fiscal consolidation effort; core inflation; data dependent; headline inflation; Anti-money laundering and combating the financing of terrorism (AML/CFT); Debt sustainability; Global; Africa; Middle East
Cover IMF Staff Country Reports
Uganda’s Monetary Policy Transmission
International Monetary Fund. African Dept.

This paper revisits monetary policy transmission in Uganda, focusing on the credit and exchange rate channels. Despite inflation being below the target, the Bank of Uganda has maintained a tight monetary policy stance. The findings support the importance of exchange rate developments in shaping monetary policy actions in Uganda, offering several policy recommendations to further strengthen monetary policy transmission and enhance the inflation targeting framework.
Keywords:
BOU monetary policy committee; monetary policy transmission; exchange rate channel; monetary policy decision; monetary policy shock; Exchange rate policy; Bank credit; Credit
Cover IMF Working Papers
E-Money and Monetary Policy Transmission
Zixuan Huang
,
Amina Lahreche
,
Mika Saito
, and
Ursula Wiriadinata
E-money development has important yet theoretically ambiguous consequences for monetary policy transmission, because nonbank deposit-taking e-money issuers (EMIs) (e.g., mobile network operators) can either complement or substitute banks. Case studies of e-money regulations point to complementarity of EMIs with banks, implying that the development of e-money could deepen financial intermediation and strengthen monetary policy transmission. The issue is further explored with panel data, on both monthly (covering 21 countries) and annual (covering 47 countries) frequencies, over 2001 to 2019. We use a two-way fixed effect estimator to estimate the causal effects of e-money development on monetary policy transmission. We find that e-money development has accompanied stronger monetary policy transmission (measured by the responsiveness of interest rates to the policy rate), growth in bank deposits and credit, and efficiency gains in financial intermediation (measured by the lending-to-deposit rate spread). Evidence is more pronounced in countries where e-money development takes off in a context of limited financial inclusion. This paper highlights the potential benefits of e-money development in strengthening monetary policy transmission, especially in countries with limited financial inclusion.
Keywords:
Monetary policy transmission; banks; nonbank financial institutions; e-money; panel data; e-money development; e-money issuer; e-money intensity; E-Money intensity; Financial inclusion; Central bank policy rate; Deposit rates; Bank credit; Sub-Saharan Africa; Africa
Cover IMF Staff Country Reports
Front Matter
International Monetary Fund. African Dept.

IMF Country Report No. 24/77

Keywords:
inflation risk; B. minimizing inflation; inflation outlook; transparency policy; development expenditure; Inflation; Fiscal consolidation; Credit; Global
Cover IMF Staff Country Reports
Uganda: Fifth Review Under the Extended Credit Facility Arrangement and Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Uganda
International Monetary Fund. African Dept.
This paper presents Uganda’s Fifth Review under the Extended Credit Facility Arrangement and Request for Modification of Performance Criteria. Economic recovery continues to gain strength following a rapid decline in inflation, favorable agriculture and robust industrial and services activity. Fiscal financing and foreign portfolio flows are facing headwinds amid tight global financial conditions and the passage of the Anti-Homosexuality Act in May 2023. The authorities are implementing fiscal consolidation to contain vulnerabilities, maintaining a moderately tight monetary stance in the face of upside risks to inflation and undertaking reforms to improve governance and reduce corruption. All September 2023 quantitative performance criteria were met, as well as most June 2023 indicative targets (ITs). Preliminary data suggest that the December 2023 IT for net credit to government and inflation were met but the IT for net international reserves was missed. Four out of seven structural benchmarks for the current review were met on or before test dates, and one was completed with a delay.
Keywords:
government debt service; inflation risk; excise duty regime; inflation outlook; authorities' effort; ECF program; financing risk; Inflation; Anti-money laundering and combating the financing of terrorism (AML/CFT); Credit; Imports; Global
Cover IMF Staff Country Reports
Uganda: Fourth Review under the Extended Credit Facility Arrangement, Requests for a Waiver of Nonobservance of a Performance Criterion and Modification of a Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Uganda
International Monetary Fund. African Dept.
This paper presents Uganda’s Fourth Review under the Extended Credit Facility Arrangement, the Requests for a Waiver of Nonobservance of a Performance Criterion and Modification of a Performance Criterion and the Financing Assurance Review. The program aims to support the near-term response to the coronavirus disease 2019 pandemic and boost 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. The Ugandan economy is projected to grow by 5.5 percent in FY 22/23 and 6 percent in FY 23/24. Inflation has been declining and is expected to reach the Bank of Uganda’s medium-term target of 5% core inflation by end-2023. A stronger tightening of global financial conditions would constrain the availability of syndicated loans and weigh on financial sector stability. Fiscal consolidation and tight monetary policy remain essential to keep debt on a sustainable path. Structural reforms will need to continue focusing on strengthening governance and anticorruption frameworks, enhancing domestic revenue mobilization, and boosting financial inclusion.
Keywords:
FX reserves-financed government import; core inflation; steadfast adherence; excise duty regime; monetary policy implementation; Credit; Debt sustainability; Global
Cover IMF Staff Country Reports
Uganda: Fourth Review under the Extended Credit Facility Arrangement, Requests for a Waiver of Nonobservance of a Performance Criterion and Modification of a Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Uganda
International Monetary Fund. African Dept.

1. Macroeconomic outlook. The economy is recovering from shocks induced by the war in Ukraine and the Ebola outbreak, which affected tourism. Robust industrial activity and services have supported growth while unfavorable weather conditions for agriculture have improved. Inflation appears to have peaked. Thanks to a strong public health effort, the recent Ebola outbreak was declared concluded in January. The growth outlook is slightly more favorable in the near-term relative to the combined 2nd and 3rd reviews, while the end-2023 and FY23/24 inflation projections have been marked down. The current account deficit remains elevated and external financial conditions continue to be tight, reflecting the uncertain outlook for global financial conditions and risk sentiment. The global financial market turmoil that began in March could further tighten external financial conditions if it persists, and the conflict in Sudan could hurt exports and exert further pressure on the balance of payments.

Keywords:
monetary policy stance; core inflation; budget support; financing needs; IMF obligation; Credit; Imports; International reserves; Global
Cover IMF Staff Country Reports
Uganda: Second and Third Review under the Extended Credit Facility Arrangement; and Requests for a Waiver of Nonobservance of Performance Criterion and Rephasing of Access; Press Release; and Staff Report
International Monetary Fund. African Dept.
This paper discusses Uganda’s Second and Third Reviews under the Extended Credit Facility (ECF) Arrangement, Requests for a Waiver of Nonobservance of Performance Criterion, and Rephasing of Access. The Ugandan authorities are persevering in their reforms despite facing multiple shocks from an unfavorable external environment and new public health challenges. The authorities remain committed to implementing reforms supported by the ECF. Maintaining macroeconomic stability, improving budget composition, and reducing government financing needs will help boost private sector growth and improve people’s livelihoods. Continued resolute and timely implementation of structural reforms, including anticorruption and governance measures, remains key for the success of the program. The Ebola outbreak, rising security challenges, and further spillovers from the war in Ukraine represent the main risks. Uganda’s moderate level of public debt and continued access to concessional financing would provide space to achieve program objectives. A structural benchmark on the asset declaration regime was converted into a prior action for the review and has been met.
Keywords:
data release; energy price shock; staff appraisal; high frequency indicator; core inflation; Inflation; Credit; Imports; Global
Cover IMF Staff Country Reports
Uganda: Second and Third Review under the Extended Credit Facility Arrangement; and Requests for a Waiver of Nonobservance of Performance Criterion and Rephasing of Access; Press Release; and Staff Report
International Monetary Fund. African Dept.

1. Macro outlook. The recovery from the pandemic is expected to continue, but the outlook has become more challenging in recent months. Growth has slowed because of weakening domestic demand and spillovers from the war in Ukraine. Inflation has increased, reflecting drought and higher imported commodity prices, such as food, fuel and fertilizer. Price pressures have broadened to services and goods beyond fuel and food.

Keywords:
headline inflation; core inflation; transfer program; social spending; IMF obligation; Credit; Inflation; Global
Cover IMF Staff Country Reports
Front Matter
International Monetary Fund. African Dept.
Keywords:
ECF arrangement; IMF arrangement; IMF's transparency policy; climate adaptation policy; financing need; COVID-19; Credit