The International Monetary Fund (IMF) has approved a 36-month arrangement under the Extended Credit Facility (ECF) for Uganda in an amount equivalent to US$1 billion (about Shs3.5 trillion) to support the post-COVID-19 recovery and Uganda’ plan to increase households’ incomes and inclusive growth by fostering private sector development.
According to the IMF, the COVID-19 pandemic has opened a sizeable gap between the resources the government has, and what it needs, a situation that will persist over the medium term.
IMF statement released On Monday stated that “without additional resources, the government would have to cut spending, including on health, and will have to resort to expensive domestic or non-concessional external borrowing. This would increase costs and reduce resources available for expanding private sector credit,”
Deputy Managing Director and Acting Chair, Tao Zhang, while explaining the reasons for the support, 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.”
He added that, “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.
Approval of the ECF arrangement enables immediate disbursement of about US$258 million, usable for budget support. “This follows Fund emergency support to Uganda under the Rapid Credit Facility (RCF) in May 2020 of SDR361 million (100 percent of quota or US$491.5 million),”