UGANDA

UGANDA
E. Program Design
29. The authorities propose changes to their program, given developments in FY15/16 and
the more muted economic outlook. The overall program objectives, in particular raising the revenue
yield by ½ percent of GDP remain in place. However, reflecting base effects from FY15/16 and lower
nominal growth as well as concerns over balance of payments inflows, the authorities propose to
adjust two QACs (the ceiling on the overall deficit and the minimum accumulation of international
reserves) and a few indicative targets for the remainder of the program period (MEFP Table 1.1). They
also propose to reschedule those SBs for which they will require more time (MEFP Table 1.2).
30. In addition, the authorities propose four new SBs, including those on AML/CFT and
public financial management (MEFP Table 1.2):
Ministry of Finance to further strengthen the AML/CFT framework in line with the international
standard by liaising with Parliament to amend the Anti-Terrorism Act to adequately criminalize
the financing of terrorism (SB, end-December 2016).
Ministry of Finance to establish a framework for following up and reporting on the
implementation of the recommendations of value-for-money audits conducted by the Auditor
General’s office (SB, end-March 2017).
Ministry of Finance to produce a manual setting out national parameters, shadow prices, and
conversion factors to be used in all economic project appraisals prior to admission into the
Public Investment Plan (SB, end-March 2017).
Ministry of Finance and BoU to prepare and submit to Cabinet a policy to regulate mobile
money banking (SB, end-April 2017).
STAFF APPRAISAL
31. The Ugandan authorities have managed well in a difficult election year. Fiscal slippages
were contained compared with the 2011 election, and inflation was kept close to target. However,
growth at 5 percent—2 percent in per-capita terms—falls short of past performance and aspirations
and seems insufficient to shake an undercurrent of negative sentiment. The scaling up of infrastructure
investment is intended to address growth bottlenecks, and will be most effective if combined with
investments in human capital and improvements in the business environment. Staff commends
Uganda for hosting refugees from neighboring countries and allowing them the opportunity to be
economically active. The international community is called upon to provide financial assistance to
mitigate the humanitarian crisis and support this integration model.
32. Staff notes the mixed performance under the authorities’ program through June 2016.
Stable inflation and the build-up of international reserves are welcome, as is the protection of povertyalleviating
expenditures. The fiscal slippages were contained, and partly reflect lower nominal growth.
However, expenditure composition has deteriorated, as externally financed development spending fell
short of expectations and current, less productive expenditure increased. This points to weaknesses in
the budget and public investment management processes that undermine the intended scaling up of
infrastructure investment. The authorities met SBs aimed at improving public financial management
18 INTERNATIONAL MONETARY FUND