The Executive Board of the International Monetary Fund (IMF) has approved a 36-month arrangement under the Extended Credit Facility (ECF) of $1 billion about Shs 3.55 trillion to Uganda.
The approval was announced on Monday by the International Monetary Fund.
“The Executive Board of the International Monetary Fund (IMF) approved a 36-month arrangement under the Extended Credit Facility(ECF) for Uganda in an amount equivalent to SDR722 million (200 percent of quota or about US$1 billion) to support the post-COVID-19 recovery and the authorities’ plan to increase households’ incomes and inclusive growth by fostering private sector development,” IMF said in a statement.
According to the International Monetary Fund, US$258 million will be released immediately to help support the country’s budget.
Making a case for the loan, IMF said that Uganda’s economy has been severely hit by the global pandemic which reversed decade-long gains in poverty alleviation and opened up fiscal and external financing gaps.
The international body said the loan will help fund some of these efforts that have been derailed by the onset of the pandemic.
“Fiscal consolidation, appropriately based on both revenue and expenditure measures during the first year of the authorities’ program, seeks to stabilize the public debt ratio while increasing social spending, including for vaccines. The implementation of the authorities’ Domestic Revenue Mobilization Strategy, better management of public investment, control of domestic arrears and advances in cash management will support the fiscal strategy,” said Tao Zhang, the IMF Deputy Managing Director.
“Prudent debt management is important to reduce vulnerabilities, particularly given Uganda’s moderate risk of debt distress. Every effort should continue to be made to seek concessional financing and pursue relief under the Debt Service Suspension Initiative. Contingency plans put in place would help mitigate risks.”
Zhang however warned close attention should be paid to minimizing financial stability risks including strict adherence to accounting and prudential standards.
He said that whereas the Ugandan government has made progress in publishing information on audits and the use of COVID-19 funds, more is still required to strengthen the accountability of high-level officials.
Uganda has previously received US$31.6 million from the African Development Bank, US$491 million from the International Monetary Fund and US$344 million from the World Bank to help in the Covid fight.