IMF Executive Board Approves $ 491.5 Million Disbursement to Uganda to Address COVID-19 Pandemic
May 6, 2020
- Uganda’s economy is hit hard by the COVID-19 pandemic.
- To meet urgent balance of payments and public finance needs, the IMF approved emergency assistance of US $ 491.5 million for Uganda under the Quick Credit Facility.
- Authorities have timely increased health spending and introduced bold measures to help contain and mitigate the spread of the disease, as well as cushion the impact on the most vulnerable and the private sector.
WASHINGTON DC – The Executive Board of the International Monetary Fund (IMF) today approved a disbursement of SDR 361 million (approximately US $ 491.5 million or 100% of quota) for Uganda under of Quick Credit Facility (FCR). It will help finance health, social protection and macroeconomic stabilization measures, address urgent balance of payments and fiscal needs resulting from the COVID-19 epidemic, and catalyze further support from the international community.
The Ugandan economy is hit hard by the COVID-19 pandemic and, in particular, key sectors such as services (tourism), transport, construction, manufacturing and agriculture. The difficult external environment limits remittances and foreign direct investment. The pandemic has also exacerbated challenges posed by heavy rains in early 2020 and the ongoing locust invasion.
To contain the impact of the pandemic, the authorities have increased health spending, strengthened social protection for the most vulnerable and strengthened their support for the private sector. The Bank of Uganda has reduced interest rates appropriately and provided liquidity to preserve financial stability, while maintaining exchange rate flexibility.
The weakening economic conditions resulting from the Covid-19 pandemic have put significant pressure on revenue collection, expenditure, reserves and the exchange rate, creating significant urgent external and fiscal financing needs.
The IMF continues to closely monitor the situation in Uganda and stands ready to provide policy advice and additional support as needed. The authorities have also committed to putting in place targeted transparency and accountability measures to ensure the appropriate use of emergency funding.
Following the Board’s debate on Uganda, Mr. Tao Zhang, Deputy Managing Director and Acting President, made the following statement:
“The global COVID-19 pandemic is expected to hit the Ugandan economy severely through several channels, with adverse effects on economic activity and social indicators. The external and fiscal accounts are expected to deteriorate, creating significant urgent external and fiscal financing needs.
“To limit the human and economic impact of the pandemic, authorities quickly adopted bold preventive measures to contain the spread of the virus and increased health spending to strengthen the capacity of the health system. Interventions to support the most vulnerable have also been put in place. In addition, the Bank of Uganda quickly put in place policy measures to support liquidity, preserve financial stability and support economic activity. The authorities are encouraged to continue strengthening social protection programs in order to mitigate the impact on the vulnerable population and protect health spending allocations in the medium term.
“A temporary widening of the budget deficit is justified in the short term to allow the implementation of the response plan. Despite a temporary deterioration in debt indicators and heightened vulnerabilities, public debt is expected to remain sustainable. The authorities remain committed to ensuring debt sustainability, including through their efforts to improve revenue collection and strengthen public investment management.
“The authorities are committed to transparently manage the resources received and will enhance transparency and accountability. They plan to report separately on the use of funds, undertake and publish an independent audit of crisis mitigation spending, and publish major supply contracts.
“The IMF’s emergency financial support under the Quick Credit Facility, along with the additional donor funding it should help catalyze, will help meet urgent balance of payments and budget support needs. from Uganda. ”
IMF Lending Tracker (request for emergency financing approved by the IMF Executive Board)
IMF Executive Board Calendar