KAMPALA – Uganda will request the World Bank for a loan of $190 million to help cushion its economy from the impact of the coronavirus pandemic, Africa Tembelea has learnt.
In a statement late Thursday, Finance minister Matia Kasaija, told parliament that government has cut its economic growth forecast this fiscal year to 5.2–5.7% from an initial projection of 6%.
— Parliament of Uganda (@Parliament_Ug) March 19, 2020
According to Mr Kasaijja, disruptions caused by the coronavirus are expected to cut industrial output, tourism earnings and the government’s tax collections.
He said government will seek a $100 million budget support loan for this financial year and a further $90 million for the next financial year.
It [government] will also approach the International Monetary Fund for help with a projected decline in foreign exchange reserves from 4.2 months’ worth of imports to 3.5 months, he added.
The Ugandan shilling declined sharply this week, prompting the central bank to intervene three times in a row to sell dollars and offer support.
As a result of the economic upheaval from the outbreak, Kasaija said that Uganda’s imports were expected to decline 44% in the four months to June. The expected widespread loss of jobs was likely to push an estimated 780,000 people into poverty, he said.
Uganda has not reported any cases of the coronavirus, which emerged in China late last year and has been spreading around the world.
During a televised national address about COVID-19 on Wednesday, Ugandan President Yoweri Museveni ordered the closing of schools, bars and also banned public gatherings to prevent any outbreak.
Mr. Museveni said the misfortunes of the pandemic should be turned into an opportunity. He cited the continent’s huge import bill, noting that it can be turned into a boost for domestic manufacturing capacity.
“Everything you have been importing, except for petroleum products for now, now make here. The 7 billion dollars you have been using to import, keep it here. Turn misfortune into an opportunity,” Museveni said.
However, members of parliament while responding to Finance minister Matia Kasaijja, said that both his statement and that of the president were short of measures that will address effects arising out of announced closures and wider COVID-19 effects.
Ruhinda North MP, Thomas Tayebwa argued that a number of businesses had suffered dramatically since the outbreak of the pandemic, citing a button making factory in Mitooma which cannot export its products anymore.
Tayebwa said that he hoped the Minister will come up with solutions for small and medium scale businesses who have been affected inform of financial support.
“People in downtown Kampala and other businesses that have been importing merchandise from Asia or exporting products are suffering because many of them have loans and rent to pay; what is government going to do?” he asked.
On her part, Kasese District Woman MP, Winfred Kiiza said that she was disappointed with the fact that the Minister had not come up with a comprehensive plan and strategy to deal with worst case scenarios that may arise.
“We would like the Minister of Finance to return to Parliament with a more structured government response on this looming crisis that is more assuring,” she said.
In support, Speaker Rebecca Kadaga, commended the Minister on the statement but asked for a more structured response to address members’ concerns in a week.