Uganda’s current account deficit worsens
Kampala.
Uganda’s current account deficit has worsened, a new report by Bank of Uganda (BoU) has revealed.
Figures in the highlights of BoU’s monetary policy report for October 2016 show that the country’s Current Account deficit worsened from $216 million (Shs743 billion) to $358 million (about Shs1.2 trillion) during the quarter that ended in August 2016.
This implies there is high outflow of foreign currency from Uganda to service the import bills amidst reduced export earnings from commodity exports.
A current account deficit means the value of imports of goods / services / investment incomes is greater than the value of exports. The current account measures trade plus transfers of capital.
BoU says the value of the country’s export earnings has declined while the value and volume of imports has picked up as economic activities in the country rise.
BoU says the overall balance of payments during the period was a deficit of $19 million (Shs65.7 billion) during the quarter that ended August 2016.
Looking at the country’s position of balance of payment, BoU’s executive director research, Dr Adam Mugume said: “There has been a pickup in imports of goods by both the private sector and the government amidst low export earnings, which partly explains Uganda’s weak balance of payment position.”
In an interview with Daily Monitor yesterday, the principle research fellow at Economic Policy Research Centre, Dr Ibrahim Kasirye, said: We are losing value from exports partly because our agriculture exports have been weak due to prolonged droughts which partly explain the worsening current deficit Uganda is experiencing.”
Dr Kasirye said Uganda has to think long term in order to increase volume of agricultural exports pointing out that coffee exports should be on upward trajectory.
The exports
Comesa boosts exports. The central bank says export earnings from Comesa accounted, on average, for 52 per cent of Uganda’s total exports in the eight months up to August 2016.
