IMF provides emergency $491m to Uganda

May 7, 2020 in Finance, Policy by Editor

The pandemic has created substantial urgent external and fiscal financing needs.

The International Monetary Fund is providing Uganda with $491.5 million to help counter reduced foreign exchange earnings amidst a global economic downturn, tax collections and the spike in allocations to the health sector as a result of the coronavirus pandemic.

According to an IMF statement issued Wednesday the Rapid Credit Facility (RCF) will help finance the health, social protection and macroeconomic stabilization measures, meet the urgent balance-of-payments and fiscal needs arising from the COVID-19 outbreak and catalyze additional support from the international community.

In early April IMF managing director, Kristalina Georgieva said, “We have a one trillion dollars war chest and we are determined to use as much as necessary of that protecting the global economy from the scarring of this crisis. We are mobilizing emergency financing assistance to countries, and I can tell you we have never seen ever such a growing demand for emergency financing.”

Tao Zhang, the Executive Board Deputy Managing Director and Acting Chair said, “The global COVID-19 pandemic is expected to severely hit the Ugandan economy through several channels, with detrimental effects on economic activity and social indicators. The external and fiscal accounts are expected to deteriorate, creating substantial urgent external and fiscal financing needs.”

He said, “To limit the pandemic’s human and economic impact, the authorities have promptly adopted bold preventive measures to contain the spread of the virus, and scaled up health spending to strengthen the health system’s capacity. Interventions to support the more vulnerable have also been introduced. In addition, the Bank of Uganda has swiftly introduced policy measures to support liquidity, preserve financial stability and support economic activity. The authorities are encouraged to continue to step up social protection programs to cushion the impact on the vulnerable population and to protect health spending allocations over the medium term.”

He said the RCF, along with the additional donor financing it is expected to help catalyze, will help address Uganda’s urgent balance of payments and budget support needs.