IMF Board to decide on Uganda’s request for extra financing

May 10, 2021 in Finance by Editor

Rice said the exact final amount the IMF will offer depends on Uganda’s estimated balance of payments needs and the strength of policies the authorities commit to implement.

The International Monetary Fund (IMF) has confirmed that the Ugandan government has made a request for financial assistance in light of the Covid-19 pandemic that has squeezed tax revenues.

At the end of last week, Parliament passed a UGX44.7 trillion (about $12.6 billion) budget for 2021/22 with a focus on job and wealth creation and agro-industrialisation. However due to the pandemic the resource envelop is light compared to past years.

A request of $900 million has been mooted, but as usual, the IMF is divulging little about a positive response although finance officials in Kampala are confident. IMF is where governments apply too in regard to shoring up  foreign exchange reserves. However, in return the IMF lays down certain conditions or policies for a government to follow which it perceives to be the best route to ensure a recovery.

During a media briefing last week, Gerry Rice the IMF Director for Communication said, “The authorities (Uganda government) have requested a three-year financial arrangement. Again, to help continue to fight against the pandemic and build forward to more inclusive growth. I can tell you discussions have progressed well with details yet to be ironed out on the potential magnitude of that financial assistance and on the authority’s reform program that would be the complement to any financial arrangement from the IMF.”

He said, “The exact final amount will depend on Uganda’s estimated balance of payments needs and the strength of policies the authorities commit to implement. And, of course, as is always the case, the ultimate approval of the arrangement rests with our Executive Board.”

Elaborating on the background of Uganda’s request, he said “We’ve had fairly intensive engagement there via our surveillance and engagement on economic policy issues prior to the Covid-19 crisis. And then as some of you may recall, the authorities requested and indeed obtained emergency financial assistance from the IMF last year. That was for about $491 million, again, to help fight the crisis—part of our overall response to the crisis. Some 86 countries, as some of you may know, have received assistance from the IMF over the past year, Uganda was one of them.”