UGANDA

UGANDA
BACKGROUND AND RECENT DEVELOPMENTS
1. The political cycle has complicated policy making. The February 2016 presidential and
parliamentary elections and the subsequent events weighed on sentiment. The elections also
contributed to fiscal slippages. President Museveni was declared winner with 61 percent of the
votes, and is now in his fifth term. Parliament and cabinet took office in June. The new
government has reiterated the objective of reaching middle-income status by 2020 through
infrastructure investment, agricultural growth, and supporting private sector job creation.
2. The economy has performed reasonably well in a complex environment.
Growth slowed marginally to 4.8 percent in FY2015/16 from 5 percent in the previous year
(Figure 1), as the elections and adverse global
and regional developments, particularly in
neighboring South Sudan, contributed to a
slowdown in investments and exports. After a
sharp depreciation in 2015, the shilling
appreciated and stabilized as market
sentiment improved. High frequency
indicators suggest a strengthening of
economic activity, with growth projected to
nudge up to 5 percent in FY2016/17,
supported by rising private and public
investments. Nevertheless, growth lags
behind the rates achieved in Uganda’s recent
past and those of regional peers.
12
9
6
3
0
-3
Per capita real GDP growth*
(percent)
Ethiopia Tanzania Rwanda
Uganda Burundi Kenya
FY10/11 FY11/12 FY12/13 FY13/14 FY14/15 FY15/16
* Refer to FY data or calculated equivalents.
12
9
6
3
0
-3
3. Despite significant progress over the last decade, poverty remains elevated.
The poverty rate has come down from 62.2 percent in 2003 to about 34.6 percent in 2013, under
the international poverty line. 1 Vulnerability to poverty also remains high, with about 43 percent
of Ugandans classified as insecure non-poor. During 2005–09, two out of three
non-poor fell back into poverty. Reducing poverty further also calls for higher and more inclusive
growth. This challenge notwithstanding, Uganda is hosting refugees from South Sudan through a
commendable integration model (Box I).
4. The current account deficit narrowed by 1 percentage point to 5.9 percent of GDP in
FY2015/16, but is expected to widen again. Imports dropped sharply, mainly due to lower oil
price and delayed investments. This more than offset a decline in exports on account of weak
1
Based on the World Bank’s 2016 Uganda Poverty Assessment Report. The poverty rate refers to poverty
headcount ratios measured by the international poverty line of 2011 international PPP$1.9 per day. Using
Uganda’s national poverty line set over 20 years ago, the poverty rate declined from 38.8 percent in 2003 to
19.7 percent in 2013.
4 INTERNATIONAL MONETARY FUND