Uganda: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Uganda

2024ARTICLE IV CONSULTATION—PRESS RELEASE;STAFF REPORT; AND STATEMENT BY THE EXECUTIVEDIRECTOR FORUGANDA Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussionswith members, usually every year. In the context of the2024Article IV consultation withUganda, the following documents have been released and are included in this package: •APress Releasesummarizing the views of the Executive Board as expressed during itsSeptember 6,2024consideration of the staff report that concluded the2024Article IVconsultation withUganda. •TheStaff Reportprepared by a staff team of the IMF for the Executive Board’sconsideration onSeptember 6, 2024, following discussions that ended onMay 9,2024with the officials ofUgandaon economic developments and policies. Based oninformation available at the time of these discussions, the staff report was completedonAugust 20, 2024. •AnInformational Annexprepared by the IMFstaff. •ADebt Sustainability Analysisprepared by the staffsof the IMF and the World Bank. •AStatement by the Executive DirectorforUganda. The documents listed below have been or will be separately released. Selected Issues TheIMF’s transparency policy allows for the deletion of market-sensitive information andpremature disclosure of the authorities’ policy intentions in published staff reports andother documents. Copies of this report are available to the public from International Monetary Fund•Publication ServicesPO Box 92780•Washington, D.C. 20090Telephone: (202) 623-7430•Fax: (202) 623-7201E-mail:publications@imf.org Web:http://www.imf.org International Monetary FundWashington, D.C. IMF Executive Board Concludes the 2024 Article IVConsultation with Uganda FOR IMMEDIATE RELEASE •Uganda has navigated the post pandemic recovery well due to sound macroeconomicpolicies. The economic recovery is strengthening with lowinflation, favorable agriculturalproduction, and strong industrial and services activity. •Uganda should continue its efforts to create fiscal space through revenue mobilization andbetter expenditure discipline, vigilant monetary policy, and exchange rate flexibility, usingfuture oil revenue to address growth impediments and improve social development whileadvancing governance reform and financial inclusion. Washington DC, September9, 2024:On September 6,the Executive Board of theInternational Monetary Fund (IMF) concluded the 2024 Article IV Consultation1with Uganda. Uganda has navigated the post-pandemic recovery well due to sound macroeconomicpolicies. The economic recovery is strengthening with low inflation, favorable agriculturalproduction, and strong industrial and services activity. Growth is estimated at 6 percent inFY23/24, up from 5.3 percent in FY22/23. Headline inflation has increased to 3.9 percent byJune 2024, driven by rising energy prices and core inflation, though the latter remains belowthe Bank of Uganda’s (BoU) target of 5 percent. Elevated current account deficit and limited capital inflows have weighed on Uganda’sinternational reserves. Despite strong coffee and gold exports, the current deficit remains highdue to rising oil project-related imports. Tight global financial conditions and reduced externalproject and budget support have driven down gross international reserves, covering only 2.9months of imports at the end of 2024 (excluding oil-project related imports). The overall fiscaldeficit continuedto decline in FY23/24 but was less than planned due torevenue underperformance and higher current spending, while development spending fellshort of expectations, worsening expenditure composition. Looking ahead, growth is expected to strengthen, boosted by the start of oil production, whichwill make lasting improvement in the fiscal and current account balances. Inflation is expectedto rise near the BoU’s target of 5 percent in FY24/25. Risks aremostly on the downside,including continued fallout from the Anti-Homosexuality Act, which complicates the alreadytight external financing conditions, potential delays in oil production, and climate-relatedshocks. Upside risks to inflation come from commodity price volatility, weather conditions, andexchange rate depreciation pressures stemming from limited capital inflows. The Executive Board of the International Monetary Fund (IMF) concluded the Article IVconsultation withUganda: “Executive Directors agreed withthe thrust of the staff appraisal. They welcomed Uganda’srobust post-pandemic recovery underpinned by sound macroeconomic policies and thefavorable medium-term outlook due to the anticipated start of oil production. At the same time,they noted pressureson international reserves amid tight global financial conditions, as wellas the elevated debt servicing costs accompanied by a shortfall in the country’s developmentspending. Directors also highlighted the significant downside risks, including from thecontinued fallout from the “Anti-Homosexuality Act”, which could exacerbate already tightexte