The executive board of the International Monetary Fund (IMF) has approved US$1 billion financing package for Uganda under an Extended Credit Facility (ECF) arrangement.
Approval of the three-year arrangement enables the immediate disbursement of about US$258 million.
IMF said the COVID-19 pandemic—which led to a global recession and domestic containment measures— has caused economic and social strife in Uganda. It has reversed poverty gains, deteriorated fiscal balances, and put pressure on external buffers.
“The three-year financing package will support the short-term response to the COVID-19 crisis and help sustain a post-crisis inclusive recovery,” IMF said in a statement. “Reforms will focus on creating fiscal space for priority social spending, preserving debt sustainability, strengthening governance, and enhancing the monetary and financial sector framework.”
The new financing package follows IMF’s emergency support to Uganda under the Rapid Credit Facility.
Mr. Tao Zhang, Deputy Managing Director and Acting Chair, said “Uganda’s economy has been severely impacted by the COVID-19 global pandemic, which reversed decade-long gains in poverty alleviation and opened up fiscal and external financing gaps.”
“The authorities’ program, supported by a new arrangement under the Extended Credit Facility, focuses on keeping public debt on a sustainable path while improving the composition of spending and advancing structural reforms to create space to finance private investment, foster growth and reduce poverty,” Zhang said.
Zhang added that “fiscal consolidation, appropriately based on both revenue and expenditure measures during the first year of the authorities’ program, seeks to stabilize the public debt ratio while increasing social spending, including for vaccines. The implementation of the authorities’ Domestic Revenue Mobilization Strategy, better management of public investment, control of domestic arrears and advances in cash management will support the fiscal strategy.”
Simon Ateba is Chief White House Correspondent for Today News Africa. Simon covers President Joe Biden, Vice President Kamala Harris, the U.S. government, the United Nations, the International Monetary Fund, the World Bank and other financial and international institutions in Washington D.C. and New York City.