By Rogers Wanambwa
KIU, Main Campus - Following the drastic effects of COVID-19 in the world, the IMF has taken the initiative to lend a helping hand to its members, Uganda inclusive.
"Today, the IMF Executive Board approved US$491.5 million to help #Uganda address the economic impact of the #COVID19 pandemic," the IMF tweeted last night.
This comes in as the Ugandan government was still grappling with a major hit on almost all economic sectors especially tourism which has grown to become the country's leading forex earner.
Following the Executive Board’s discussion on Uganda, Mr. Tao Zhang, Deputy Managing Director and Acting Chair, issued the following statement:
“The global COVID-19 pandemic is expected to severely hit the Ugandan economy through several channels, with detrimental effects on economic activity and social indicators. The external and fiscal accounts are expected to deteriorate, creating substantial urgent external and fiscal financing needs.
“To limit the pandemic’s human and economic impact, the authorities have promptly adopted bold preventive measures to contain the spread of the virus, and scaled up health spending to strengthen the health system’s capacity. Interventions to support the more vulnerable have also been introduced. In addition, the Bank of Uganda has swiftly introduced policy measures to support liquidity, preserve financial stability and support economic activity. The authorities are encouraged to continue to step up social protection programs to cushion the impact on the vulnerable population and to protect health spending allocations over the medium term.
“A temporary widening of the fiscal deficit is warranted in the short term to allow for the implementation of the response plan. Despite a temporary worsening of debt indicators and heightened vulnerabilities, public debt is expected to remain sustainable. The authorities remain committed to ensuring debt sustainability, including through their efforts to enhance revenue collection and strengthen public investment management.
“The authorities are committed to managing transparently the resources received and will strengthen transparency and accountability. They plan to report separately on the use of the funds, undertake and publish an independent audit of crisis-mitigation spending and publish large procurement contracts.
“The IMF’s emergency financial support under the Rapid Credit Facility, along with the additional donor financing it is expected to help catalyze, will help address Uganda’s urgent balance of payments and budget support needs.”
For more information, click IMF Lending tracker or the IMF Press Release.