Africa > Uganda
MACROECONOMIC DEVELOPMENTS AND PROSPECTS FOR LOW-INCOME COUNTRIES—2024—ONLINE ANNEXES
The Fourth Review Under the Policy Support Instrument (PSI) for Uganda highlights that the PSI-supported program is on track. All end-December 2011 quantitative assessment criteria were met, as were most of the structural benchmarks. The stance of macroeconomic policy remains appropriate. Monetary tightening, initiated in July 2011 in response to rising inflation, has been effective in reducing demand and price pressures in the economy. High interest rates supported by tighter fiscal policy have strengthened the currency and raised reserve levels.
This Joint Staff Advisory Note reviews the National Development Plan (NDP) 2010/11 to 2014/15 prepared by the government of Uganda. The NDP is the first in a series of six plans intended to move the country toward the national vision of a transformed modern economy in the next 30 years. The NDP expands on the vision of the earlier Poverty Eradication Action Plans, and was developed through an extensive and broad-based country-driven consultative process over the period 2008–09. IMF staff has recommended some measures to strengthen the NDP and enhance its implementation.
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.
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.