The International Monetary Fund has praised Uganda’s economic growth, but cautioned the government against complacency amid low tax revenues, corruption and high poverty rates in the country.
Uganda’s economic growth is now expected to reach 6.2 per cent this year, inflation to stay within target and debt to remain sustainable although borrowing requirements have increased. Growth in this year is based on “increasing consumer and business confidence”.
“The economic outlook is favourable,” Ms Ana Lucía Coronel, IMF mission chief and senior resident representative for Uganda, said in a statement issued on December 18.
With low inflation and higher growth, Ms Coronel said, market confidence is set to induce some recovery in credit to the private sector.
While opposition politicians who spoke to this newspaper, talked of increasing poverty among Ugandans particularly in the countryside, the IMF chief says significant investment by government in hydropower and road projects is expected to stimulate employment and bring output closer to potential.
“Many Ugandans are poor and hungry, how can IMF say that we are doing well?” Mr Nandala Mafabi, Leader of Opposition in Parliament asked.
To sustain this favourable economic growth position, IMF says the government must find the right balance between encouraging growth and avoiding crowding out private sector activity by resisting rising spending pressures and strictly adhering to the budget.
The IMF said Bank of Uganda’s inflation targeting framework, “struck the right balance” between signaling its commitment to low inflation, avoiding excessive exchange rate volatility, and ensuring consistency with the fiscal policy stance.