Economy is struggling - Minister Kasaija
What you need to know:
- Although Uganda’s economy is not in a bad shape, Finance minister Matia Kasaija says government is struggling with the economy.
Although Uganda’s economy is not in a bad shape, Finance minister Matia Kasaija yesterday said government is struggling with the economy.
In a joint press briefing with the International Monetary Fund, Mr Kasaija said there has been reduction in GDP growth in Financial Year 2015/16, some shortfall in revenue collection, high level of non-performing loans in banks and suspension of development finance by the World Bank, which has caused pressure in the economy.
“We are struggling, the situation is not as easy, but we are not desperate and the situation is under control. For us [government] we are ready to listen and to learn,” he said.
On how much government has collected since the beginning of this fiscal year, Mr Kasaija said Shs2.9 trillion has been collected and there is a shortfall of Shs98 billion.
Mr Kasaija dismissed talks that the economy is in recession. “The economy is not receding, the disposable income for drinking may not be there but we are not in recession,” he said.
Asked about arrears, Mr Kasaija said the Finance ministry does not support arrears and he can only plead guilty when he doesn’t release the funds to ministries.
“To avoid having arrears, we have to budget appropriately and the money budgeted for has to be absorbed,” he said.
“Uganda’s debt level is under control. Our debt to the GDP ratio is about 31 per cent, which is still below the 50 per cent threshold, we are in control and we will ensure that our debt level remains manageable,” Mr Kasaija said.
Missed fiscal targets
The team of International Monetary Fund (IMF) led by the IMF mission chief for Uganda, Dr Alex Schimmelpfenning, has been in the country for the last two weeks conducting the seventh review of Uganda’s economic programme under the Policy Support Instrument (PSI).
Dr Schimmelpfenning said performance under the PSI has been mixed and that the key fiscal targets for the Financial Year (FY) 2015/16 were missed.
Uganda’s tax domestic tax ratio to the GDP for the FY 2015/16 increased to 13.9 per cent due to efforts by government to expand the tax base.
Dr Schimmelpfenning said the mission notes the difficult environment for fiscal policy in FY 2015/16, pointing out that while revenue collection increased as a share of GDP, it fell short of programme expectations; reflecting lower than projected nominal GDP growth.
“At the same time, current spending was higher than anticipated. Taken together, the overall deficit target was missed by 0.4 per cent of GDP, and the amendments to the Anti-Money Laundering Act and the Insurance Act before December 2016,” he said.
Currently, Uganda’s current fiscal deficit stands at 6.7 per cent of the GDP due to increased public expenditure.
The issues at hand
No recession. Mr Kasaija dismissed talks that the economy is in recession.
Collection. Mr Kasaija said Shs2.9 trillion has been collected and there is a shortfall of Shs98 billion.
Fiscal deficit. Currently, Uganda’s current fiscal deficit stands at 6.7 per cent of the GDP due to increased public expenditure.