Uganda spent less in the first quarter of the current financial year (from July to October) compared with the same period last year, due to the decline in oil prices and a reduction in imports, which saw the value of imported goods fall by $153.7m.
Bank of Uganda (BoU) said the value of imported goods fell by 9.2 per cent from $1.68b for the July-October period in 2014 to $1.527b for the same period in 2015, due to a decline in the value of oil imports by 34 per cent, attributed to a fall in international oil prices.
BoU executive director of research Adam Mugume said non-oil imports by the private sector declined by 8.1 per cent, from $1.245b to $1.144 b, which could be reflective of declining private sector demand as well as the impact of global disinflation.
In terms of exports, the BoU monetary policy report shows that in the first four months of the 2015/16 financial year, the value of goods exported fell by 4.6 per cent compared with the same period in 2014/15.
This is due to a reduction in the price index, which declined by 7 per cent, as opposed to the volume index, which increased by 2.5 per cent.
While presenting the monetary policy statement for December, BoU governor Emmanuel Tumusiime-Mutebile said the projection for the real economic growth for 2015/16 remains at five per cent, with a low inflation rate.
However, there are downside risks to the projected growth, including those from the external economic environment.
“The major risk factors may include: Slower growth in major emerging market economies; further decline in global commodity prices; reduced access to external finance for developing countries due to heightened perceptions of risks, and possible monetary policy tightening in the US. Consequently, our balance of payments in the short to medium-term will remain vulnerable to external shocks,” said the governor.
Fed raises rates
On Dec. 16, the United States Federal Reserve raised the benchmark interest rate for the first time since 2006 by 0.25 percentage points. Prior to the rate rise decision, U.S. interest rates had been near zero since 2008. Officials said the economy was strong enough to keep growing with a little less help from the central bank.