The International Monetary Fund has applauded Uganda's intervention policies in the recovery of the economy after the Covid-19 pandemic, saying some of the parameters that are used to show the health of businesses have stayed within government's targets.
The Executive Board of the International Monetary Fund, at the conclusion of the 2024 Article IV consultation with government officials, noted that Uganda's economy has performed well based on the low inflation, favourable agricultural production, and strong industrial and service activity.
"Uganda's economic recovery is strengthening on the back of low inflation, favourable agricultural production and strong activity in the industrial and services sectors. The envisaged start of oil production in late 2025 is expected to further boost growth and improve fiscal and external balances in the medium term," the report noted.
It added: "Risks are mostly on the downside, including continued fallout from the Anti-Homosexuality Act, which complicates already tight external financing conditions, potential delays in oil production, and climate-related shocks."
The Article IV consultations are a key process conducted by the International Monetary Fund to assess the economic health of its member countries. Some investors consider the IMF's reports as an independent assessment of a country's state of the economy, which determines
their decision-making process before making an investment.
However, the IMF writes that Uganda's gap in real per capita income with other emerging and developing economies continues to widen. Over the last year, external buffers have also declined, denting Uganda's ability to weather future shocks. The Bank of Uganda has decided to buy gold from local artisanal miners as part of its plan to belly up its foreign exchange reserves.
The IMF also notes that when it comes to access to commercial bank credit, the banks prefer to deal with government and its low-risk securities, and not the private sector. As such, the private sector has struggled to access cheaper credit in the market, and in the process faces challenges of expanding its businesses and creating more job opportunities.
