Africa-Press – Uganda. The International Monetary Fund (IMF) has extended a second credit facility to Uganda that will seek to shore up and enhance economic recovery subdued by Covid-19 disruptions.
The $1b (about 3.547 trillion) facility, facilitated under the Extended Credit Facility programme has been a subject of discussion since March.
The discussions, which have been largely virtual, were completed at the close of last month. In a statement early this week, Mr Amine Mati, who led the IMF team in the virtual discussions, noted, the agreement was, however, subject to approval from the IMF executive board.
This will be the second time IMF is extending support to Uganda to shore up sectors including health, social protection and macroeconomic stabilisation that have been hit by Covid-19.
Earlier, on May 6 the IMF had board approved $491.5m for Uganda under the Rapid Credit Rapid to meet urgent balance-of-payments and fiscal needs arising from Covid-19-related disruptions as well as catalysing additional support from the international community.
Mr Mati said the credit extension had been necessitated by the fact that Uganda’s economy had been hit hard by Covid-19, eroding people’s livelihoods, halving growth as well as driving an increase in poverty.
This, he said, had reversed decade-long gains in wealth creation as well as slowed earnings from exports thus widening the fiscal deficit that has pushed up public debt close to 50 per cent of gross domestic product by June 2021.
Emergency financial support from IMF and the World Bank has been key in closing financing gaps and supported mitigation measures.
Mr Mati said it was important that the IMF supports Uganda through the next phase of the Covid-19 response as well as strengthen fundamentals of the economy for more inclusive private sector-led growth.
“As the pandemic eases, we envisage a return to revenue-based fiscal consolidation while increasing priority social spending, including on Covid-19 vaccines and protect vulnerable households,” he said, noting that agreed upon improvements, along with improved pro-growth spending, will create space for private sector credit and boost human capital, setting the stage for a durable and inclusive growth.
Committed
According to Mr Mati, the Ugandan government, as a condition for the credit facility, committed to fight corruption in Covid-19 dealings by publishing procurement contracts and providing information on the use of funds to mitigate the impact of Covid-19.
