UGANDA, Kampala | Real Muloodi News | Uganda has taken out a second loan from the International Monetary Fund (IMF) since the Covid-19 pandemic outbreak, Tower Post reported. The IMF, in a statement, confirmed it will lend Uganda USD 1,000,000,000 (one billion) in a three-year program under the Extended Credit Facility. Uganda will receive this loan in three instalments of USD 330 million every financial year.
The head of African Division for IMF, Amine Mati, explained the reasoning for the loan: “The IMF-supported program supports the next phase of the COVID-19 response and strengthens the fundamentals of a more inclusive private sector-led growth, as the pandemic eases, it envisages a return to revenue-based fiscal consolidation while increasing priority social spending, including COVID-19 vaccines and to protect vulnerable households, and more efficient infrastructure investment.”
Uganda’s Current Debt Situation
Since this is the second loan Uganda has taken from the IMF, the first one approximating to USD 491.5 million under the Rapid Credit Facility, concerns about Uganda’s debt to GDP ratio are rising. Uganda’s total public debt hit a record in December 2020, estimating at 65.82 trillion shillings. In terms of the GDP ratio, there was an increase to 47.5% in 2020 from 38% in 2019. Five months into 2021, Uganda’s debt to GDP ratio passed the 50% debt to GDP ratio threshold set by the IMF.
According to Mati, “strengthening governance and budget transparency will be key to fostering public sector efficiency while preparing the ground for sound management of oil revenues.”
IMF on Uganda Fighting Corruption
In its statement, IMF applauded Ugandan’s government’s efforts in fighting corruption, explaining:
“The authorities’ commitment to strengthen anti-corruption efforts is welcomed and encouraged. Further progress with publishing COVID-19 procurement contracts and providing information on the use of funds to mitigate the impact of COVID-19 is expected in the next few days, in line with the government’s commitments.”
IMF further explained that besides reducing government debt, an enhanced effort to collect and manage cash flows is crucial for improving the business sector and attracting private sector investments.
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