The International Monetary Fund (IMF) board on Monday approved a 36-month arrangement under the Extended Credit Facility (ECF) for Uganda in an amount equivalent to SDR722 million (200 percent of quota or about US$1 billion) to support the post-COVID-19 recovery.
According to a statement from the IMF, the new aid provides US$258 million immediately to help the government cover spending, and comes on top of an emergency loan of nearly $500 million last year.
“Uganda’s economy has been severely impacted by the COVID-19 global pandemic, which reversed decade-long gains in poverty alleviation and opened up fiscal and external financing gaps,” the IMF Deputy Managing Director Tao Zhang said in a statement.
Mr Zhang also revealed that the new arrangement under the ECF, focuses on keeping public debt on a sustainable path while improving the composition of spending and advancing structural reforms to create space to finance private investment, foster growth and reduce poverty.
The IMF notes that a mild recovery is underway in some sectors, with economic growth in FY 21/22 expected to reach 4.3 percent before returning to pre-pandemic rates of 6-7 percent in the medium term.
“The outlook remains highly uncertain, with risks tilted to the downside, including from a resurgence of tighter containment measures linked to higher COVID-19 positivity rates,” a statement from the IMF further read.
Africa Tembelea has also since learnt that the authorities’ program, enshrined in the third National Development Plan (NDPIII), is built around the principles of private sector-led inclusive growth and public sector reforms to strengthen governance and transparency.
“It envisages multi-year fiscal consolidation while increasing priority and high-quality infrastructure spending,” the IMF said.
The program will include reforms to increase domestic revenue, foster public sector efficiency and strengthen governance while preparing the ground for sound management of oil revenues.