1. Our Ugandan authorities appreciate the constructive engagement with staff and share the thrust of staff's assessment of economic developments and key policy priorities.
Introduction
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.
Abstract
Growth in sub-Saharan Africa has recently shown signs of improvement, but is still short of levels needed to attain the Millennium Development Goals. Economists have placed increasing emphasis on understanding the policies that promote sustained jumps in medium-term growth, and the paper applies this approach to African countries. The evidence presented finds an important growth-supporting role for particular kinds of institutions and policies, but also highlights aspects of growth that are still not well understood. The paper includes policy guidance for ensuring that the poor benefit from growth.
This Selected Issues paper analyzes the underlying sources of growth in Uganda, suggesting that the contribution to growth from total factor productivity has been minor, while the high population growth poses a significant challenge to sustain a rapid improvement in living standards. The paper takes a closer look at the monetary transmission mechanisms in Uganda, aimed at assessing the appropriate choice of intermediate target and mix of liquidity sterilization instruments. It also focuses on the recent financial sector reforms undertaken by the government.
Abstract
Are improvements in growth in sub-Saharan Africa since the mid-1990s sustainable? What types of growth strategies contribute the most to reducing poverty? This paper examines these questions in four stages. First, it explores the factors contributing to this recent improvement in growth. To what extent is the growth recovery driven by favorable external conditions? Have improved policies played an important role? Has the improved growth performance been accompanied by improvements in investment, productivity growth, and basic institutions, suggesting a more durable foundation? How do these factors explain differences in performance across subgroups in the region? Which countries can be identified as the strongest performers? The analysis throughout considers correlations, since many of the factors considered are themselves strongly influenced by output growth, making it difficult to establish causal relationships.