The Independent Uganda: You get the Truth we Pay the Price
Suruma says the conditionalities from IMF/ World Bank led to policy changes such as moving from a fixed foreign exchange policy to a floating system.
“The government abandoned fixing prices for cotton and coffee and left it for market forces to determine,” he said, adding that the process also included devaluation of the Uganda Shilling to tame inflation pressures.
This entire process, Suruma says led to a loss of 170, 000 public service jobs. Currently Uganda does not receive financial support from the IMF apart from the Policy Support Instrument (PSI), a surveillance programme
that monitors Uganda’s economy and highlights areas of reforms and risks to the economy.
The PSI is used by international lenders such as the World Bank, International Finance Corporation and investors to determine key decisions while dealing with Uganda.
The last time Uganda received funds from the IMF was in 1996 under the Poverty Reduction and Growth Trust/ Enhanced Structural Adjustment Facility/Trust Fund.
BoU weighs in
Adam Mugume, the executive director for research at Bank of Uganda told The Independent that Uganda has benefited from the IMF/World Bank Structural Adjustment Programmes given that competition in the banking sector has created efficiency in the market.
“Those days you would not get a service (money) because the three banks never had the capacity to serve many clients,” Mugume said, “Currently, there are many options involving 25 banks.”
On skyrocketing debt and the pressure that come with recommendations from IMF on prioritizing debt repayment, Mugume said, a country cannot avoid debt when it is poor.
Uganda’s debt burden has risen nine percentage points to 33% of GDP in the past four years, and is projected to continue rising towards 45% of GDP by 2020.
As at the end of last year, the internationally respected firm – Moody’s Investors Service downgraded the long-term issuer rating of the Government of Uganda to B2 from B1 largely because of its big debt.
Lagarde commended Uganda for its growth and poverty reduction achievements over the past three decades underwritten by strong macroeconomic policies, and a reliance on the private sector as the engine of growth.
She said was encouraged by the government’s commitment to transparency and developing a fiscal framework that allows for a sustainable use of the oil and gas resource.
“More generally, I commended the government and the Bank of Uganda for their prudent approach to fiscal and monetary policy, she said. “ Uganda’s inflation targeting framework is serving the country well.”
Going ahead, Lagarde said Uganda needs to strengthen its policy towards infrastructure investment, stronger governance, regional integration, and a focus on social programs that can reduce inequality.
“If you tackle these challenges, you can spur stronger growth that creates good jobs for your young people. You can lay the foundation for continued success,” she said.
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editor@independent.co.ug
