Uganda

This report does not constitute a rating action. Overview Institutional and economic profile Flexibility and performance profile An ongoing IMF program provides an anchor to policy, while COVID-19 continues to pose risks to the economic recovery. Twin deficits erode headroom and resilience to further shocks. --Low domestic vaccination rates and the spread of the omicron variant globally pose risks to the anticipated recovery. --Despite a forecast gradual narrowing of the general government deficit, financing needs remain higher than pre-pandemic levels. --We expect the three-year $1billion IMF program will provide an anchor to fiscal policy and will help to contain the debt burden over the medium term. --External imbalances will remain wide as domestic demand and oil-related projects drive an uptick

...COVID-19 continues to pose risks to Uganda's economy and we expect real growth will recover modestly to 4% in the fiscal year ending on June 30, 2022 (FY2022). We expect a recovery in domestic and global demand as well as initial works on oil-related transport infrastructure investments to support growth from the second half of FY2022, leading to average growth of 5% over our forecast horizon through FY2024. Despite the expected recovery, high population growth will keep Uganda's GDP per capita among the lowest of all the sovereigns we rate. A three-year Extended Credit Facility (ECF) program with the IMF provides external financing and supports reforms to reduce fiscal and external pressures. We expect the general government deficit will narrow to 8% of GDP in FY2022 from 9.8% in FY2021, but consolidation is likely to be gradual and revenue enhancement measures will take time to materialize. Uganda retains access to concessional funding, but the government also relies on higher cost financing...

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