Economists front policy actions to rejuvenate economy

Women walk past closed shopping arcades on Luwum Street, Kampala, during the lockdown last year. Sluggish economic activity characterised by close to two years of strict coronavirus restrictions in the country have hit the economy hard and slowed growth. Photo | File

What you need to know:

  • Ex-post instruments minimise the scale of damage from shocks and invigorate the economy after shocks. 

Government officials and economists have fronted several policy actions and development strategies to help Uganda register inclusive growth in order to achieve middle income status.  

Uganda, like many countries, has continued to support people and firms amid the resurgence of infections, while calibrating their responses to the evolving economic situation. 

Overall, governments that commit to sound public finances that achieve high levels of fiscal transparency reap meaningful benefits: their budgets are more credible among other things. 

Presenting a paper on Policies and instruments to manage global shocks, during the 5th Economic Growth Forum held at Kampala Serena Hotel, the Deputy Governor Bank of Uganda, Dr Michael Atingi-Ego said there is need for effective policies and instruments to help the country manage external shocks because global shocks can originate from the financial world, cyberspace, biological and solar systems. 

Dr Atingi-Ego said the growing interconnectedness of the global economy, through financial and trade linkages, has created conditions for rapid and widespread disruptions from shocks.

The theme of the forum was, ‘Economic resilience, recovery, and resurgent growth.’ 

Dr Atingi-Ego’s presentation reveals that there are two types of policies and instruments, which includes: Ex-ante policies and instruments Ex-post policies & instruments that can help a country to withstand external economic shocks.

EIt is an analytical process, conducted at the early stages of policy-making exercise).    

Dr Atingi-Ego explained that Ex-ante instruments will help mitigate risks (self-insurance) to limit probability of shocks. If shocks happen, they will minimise the scale of damage to the economy. 

He said there is need to reduce spending on non-priority areas, postpone capital intensive and import-dependent projects because it helps improve external balance.

Ex-post instruments
Ex-post instruments minimise the scale of damage from shocks and invigorate the economy after shocks. 

Under the Ex-Ante policies and instruments, Dr Atingi-Ego explained that these include: export diversification, strong buffers position for example the country’s international reserves levels.

He said there should be sound fiscal rules to manage revenue windfalls in good and bad times.

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