Uganda: First Review Under the Policy Support Instrument and Modifications to Assessment Criteria: Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Uganda
IMF Staff Country Reports
Executive Summary The staff recommends completion of the first review. All assessment criteria were met, macroeconomic performance has been good, and the outlook is positive. Temporary diesel generators and appropriate fiscal and monetary policy responses have helped to stabilize the electric power crisis and avert a major slowdown. Uganda's medium-term expenditure framework (MTEF) aims at higher public savings based on spending restraint and a rising domestic revenue ratio. The 2007/08 budget
... The 2007/08 budget will be guided by the MTEF, allowing for (i) additional investment in infrastructure, (ii) carryover energy crisis effects, (iii) provisions for avoiding new arrears, (iv) sufficient expenditure under the Poverty Action Fund (PAF), and (v) some revenue loss due to introduction of tax incentives. The tax-to-GDP ratio and the overall balance, excluding grants, would improve by about ½ percent of GDP compared with the previous year, broadly in line with program objectives. One-time increases in electricity tariffs and temporary sugar and diesel fuel shortages are behind the recent spike in inflation. A further monetary tightening was not warranted and could have jeopardized the welcome expansion in private sector credit. The program targets inflation of four percent by end-2007/08.