Uganda’s economy has performed above expectation within unfavourable conditions. This has been discovered through a review exercised by the IMF Executive Board under the Policy Support Instrument (PSI) for Uganda. The PSI which is designed for countries that do not need balance of payments financial support was approved for Uganda by the Board on June 28, 2013 and a one-year extension was approved on June 6, 2016. This review marks the 7th review of the Board under the PSI.
In 2015, the Uganda Shilling depreciated while 2016 saw a stabilization of the currency and the current account deficit improved by 1 percentage point to 5.9 percent of GDP while there are projections that the 2016/2017 fiscal year could see a 5 percent increase. Due to elections and regional developments, the immediate 2015/2016 fiscal year had a relatively lessen growth of 4.8 per cent. However, the economy was in a good shape as there was a strong monetary policy in 2015 which helped contain inflation in a target range, and aiding the Bank of Uganda (BoU) to start an easing cycle in April 2016. The country remains at a low risk of debt distress although ongoing infrastructures has implications of a temporal increase in debt.
Looking ahead, priorities include close cooperation with the Financial Action Task Force to ensure Uganda’s swift exit from its “gray” list; strengthening domestic arrears monitoring; and amending the Bank of Uganda Act to reinforce central bank independence.