PRIMEUganda’s debt remains sustainable, says IMF

The International Monetary Fund (IMF) has said the political and economic contexts in Uganda are predictable and stable, and that the debt is sustainable, which puts the country in a better position for development.
“The macroeconomic environment is not without challenges, with high interest rates on public debt, low private credit, and dwindling capital flows, but fiscal consolidation is ongoing, and debt remains sustainable with [medium/moderate] probability of debt distress.”
The team also stated in its country report after the Article Four consultation with Ugandan authorities that the Bank of Uganda was successful in bringing inflation down from its peak swiftly, over a few months in 2022/2023, to below the inflation target with tight monetary policy and stable exchange rate.
“The financial sector appears profitable, well-capitalised, and stable but the sovereign-bank nexus is a source of concern. Structural reforms to boost inclusive growth prospects, create jobs for the growing youth population, and reduce poverty are at the core of authorities’ effort and Fund engagement across all output areas,” they said.
Under Article Four, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic development and policies and issues. 
The country report is divided into different sections; specific debt sustainability analysis, which is a joint staff analysis of the IMF and World Bank and was approved by Ms Catherine Pattillo (IMF), Mr Jay Peiris (IMF), Ms Manuela Francisco (IDA), and Mr Hassan Zaman (IDA). IDA is the International Development Association Part of the World Bank.
In this section, IMF and World staff said Uganda’s public debt ratio has effectively remained unchanged in FY2022/2023 at just above 50 percent of gross domestic product (GDP). 
The IMF and World Bank staff said mitigating debt risks requires sound macroeconomic management and strong/steadfast policy implementation. 
The IMF team says in its Article Four consultation with Uganda that President Museveni and his ruling party, the National Resistance Movement, have been in power since 1986, and the President is currently serving his sixth elective term in office. 
The team said Uganda’s elections are scheduled for January 2026, which shows a predictable political environment.
They, however, call for rationalisatiion of exemptions and better tax administration to enhance compliance., among other proposals.
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