The Executive Board of the International Monetary Fund (IMF) today completed the second review of Uganda’s economic performance under the program supported by the Policy Support Instrument (PSI).
The PSI for Uganda was approved by the Executive Board on June 28, 2013 (see Press Release No. 13/78). The IMF’s framework for PSIs is designed for low-income countries that may not need, or want, IMF financial assistance, but still seek IMF advice, monitoring and endorsement of their policies. PSIs are voluntary and demand driven (see Factsheet on the PSI).
Following the Board discussion, Mr. David Lipton, Deputy Managing Director and Acting Chair, made the following statement:
“Uganda’s recent economic performance has been broadly satisfactory, with robust growth, low inflation, and strong international reserves. However, the government net domestic financing has expanded beyond the program ceiling, and private sector credit growth has remained constrained.
“Economic policies will remain centered on achieving the growth and inflation objectives. In the short term, the authorities’ fiscal policy is expected to focus on offsetting the recent tax revenue shortfall by significantly strengthening collection. Resisting spending pressures, limiting domestic borrowing to programmed levels, and curbing the use of supplementary budgets will allow implementation of important infrastructure projects and social programs. The envisaged fiscal stance would also facilitate further monetary easing, although monetary policy should remain attuned to evolving domestic and external conditions.
“Significant progress has been achieved on institutional reform. The authorities have implemented sound public financial management reforms and adopted a new methodology to manage unpaid bills. Completing the introduction of the treasury single account, making efficient use of the upgraded payments and payroll systems, and adopting the Public Financial Management bill promptly are paramount steps to further improve governance, strengthen the budget process, and ensure sound oil revenue management. Legal amendments to further strengthen the central bank’s independence will further refine the inflation targeting regime.
“Ensuring timely implementation, transparent management, and appropriate cost-recovery of the upcoming infrastructure projects, and making further progress on the commitments within the East Africa Community integration process are welcome actions to achieve the authorities’ objectives of attaining medium-term inclusive growth and advancing poverty reduction.”