Uganda’s economy to grow by 5.5 per cent in 2023 – IMF
The IMF Resident Representative for Uganda, Ms Izabela Karpowicz
What you need to know:
- In an interview with the Monitor on Monday, the International Monetary Fund Resident Representative, Ms Izabela Karpowicz said Uganda’s economic activities have picked up
The International Monetary Fund has projected Uganda's economy to grow by about 5.5 per cent this year, reflecting a strong half-year performance and some positive news from high-frequency activity and confidence indicators.
In an interview with the Monitor on Monday, the International Monetary Fund Resident Representative, Ms Izabela Karpowicz said Uganda’s economic activities have picked up.
“Inflation peaked in late 2022 but it’s now on a declining path. As it continues to decline and global uncertainties decrease, external demand would support a stronger recovery in 2024 and beyond, thus a return to pre-Covid-19 growth rate of 6 to 7 per cent,” she said.
However, Ms Karpowicz said risks to this outlook include spillovers from geoeconomic fragmentation, a return of higher and more volatile global inflation, and climate change effects.
She said the Sub-Saharan Africa is facing higher borrowing costs due to monetary policy tightening around the globe in response to high inflation.
“Uganda is not spared from this. Yields on government securities peaked at 12-15 per cent early in 2023 and the Uganda shilling has depreciated. Difficulty in raising concessional financing, coupled with a higher interest burden, means that fewer resources are available for discretionary spending, notably on development and climate change adaptation,” Ms Karpowicz said.
She advised the Uganda government that boosting tax revenues, which are below regional comparators, is much needed and can help finance development spending while preserving the sustainability of public debt.
The Executive Director of Research at Bank of Uganda, Dr Adam Mugume said the global financial squeeze is a challenge since Uganda relies on external financing.
“However, Uganda should be able to manoeuvre through given that most of Uganda’s external debt is from multilateral creditors, mainly World Bank, IMF and African Development Bank. Uganda’s exposure to non-concessional loans is to a great extent limited and as such there is limited concern on risks associated with rollover of maturing loans from commercial lenders,” he said.
