The International Monetary Fund (IMF) issued a press release on 14 May 2015 at the end of a visit to Uganda for discussions under Article IV of the IMF’s articles of agreement and in connection with the fourth Policy Support Instrument (PSI) review.
Uganda’s economy has been performing relatively well and real economic growth is estimated to reach 5.3% in the current fiscal year and 5.8% in 2015/16. This strong growth combined with high international reserves, a sound financial system and relatively low government debt provides a buffer against economic shocks but some risks remain owing to domestic and regional uncertainties.
Significant progress has been made on increasing tax revenue collected and the package of measures introduced in the 2015 budget is expected to bring in an additional yield of 1% of GDP (compared to the 0.5% target). Domestic arrears of tax payments have been reduced although a target for the end of December 2014 was missed.
The IMF staff welcomed the efforts being made to improve tax collection. The combined effect of the new budget measures and gains in efficiency is projected to increase the tax to GDP ratio. If current expenditure pressures are contained there will be room for the planned increase in public investment without adverse effects on inflation and debt.
