Finance minister Matia Kasaija has finally admitted that government is struggling to stable the economy and save it from collapsing completely.
Kasaija was jointly addressing press with International Monetary Fund officials who visited Kampala from October 12 to 26, 2016 to conduct the seventh review of the country’s economic program under the Policy Support Instrument (PSI).
“There has been reduction in GDP growth in Financial Year 2015/16, some shortfall in revenue collection, high level of non-performing loans in banks and suspension of development finance by the World Bank, which has caused pressure in the economy,” Kasaija told press.
He added: “We are struggling. The situation is not easy but we are ready to listen and to learn.”
Kasaija said only Shs2.9 trillion has been collected in this financial year leaving a shortfall of Shs98 billion yet he denied the economy is in recession.
He said Uganda’s debt level was under control—the debt to the GDP ratio is about 31 per cent, which is still below the 50 per cent threshold.
“We are in control and we will ensure that our debt level remains manageable,” Kasaija managed to say.
The team from the International Monetary Fund (IMF) led by Axel Schimmelpfennig, IMF Mission Chief for Uganda, said Uganda’s economy performed well in a complex environment.
“The February 2016 elections, muted global growth, and regional developments weighed on sentiment, and growth declined to 4.8 percent in FY15/16.”
“The mission notes the difficult environment for fiscal policy in FY15/16. While revenue collection increased as a share of GDP, it fell short of program expectations, reflecting lower than projected nominal GDP growth. At the same time, current spending was higher than anticipated.”
It added: “Taken together, the overall deficit target was missed by 0.4 percent of GDP, and the government did not repay outstanding BoU advances at year-end. The execution of externally financed projects lagged behind target.”