The passing of the PFM Act will allow the 2015/16 Budget to be approved before the start of the fiscal year and improve the Budget process helped by fiscal policies being prepared, the fund said. In the last three years the Budget was read in June and then the Parliament’s approval done three months into the financial year, according to reports.
‘The adoption of a charter of fiscal responsibility will support fiscal policy formulation and transparency, including in preparation for petroleum revenue management,’ said IMF mission chief Ana Lucía Coronel after a team from the IMF visited Kampala to undertake a Article IV Consultation and a fourth review of Uganda’s economic programme supported by the Policy Support Instrument (PSI).
‘Ongoing initiatives to enhance financial deepening and expand access to bank services by improving financial literacy and consumer protection are welcome. The government should continue to strengthen policies to ensure that all segments of society, including the most vulnerable, share the benefits of growth.’
According to Coronel, the government’s performance under the PSI was ‘broadly satisfactory’, as fiscal and external targets for the end of December were met.
‘There was significant progress on increasing tax revenue, with the strong package introduced in the FY2014/15 budget expected to yield about 1% of GDP compared to a target of 0.5%,’ she said.
‘The stock of domestic arrears has declined considerably, although the end-December target was missed by a small margin.’
Uganda’s 2015/16 Budget has outlined fiscal policies to continue improving tax collections, contain current expenditure needs in the run up to the election and create a space for planned increases in public investment.
‘Fiscal prospects for FY2015/16 are encouraging,’ Coronel said. ‘Reducing existing infrastructure bottlenecks is key to boosting potential growth and creating job opportunities.’
Uganda’s recent economic performance has been ‘favourable’ and the nation is expected to reach a robust 5.3% growth in 2015/16, compared to 4.5% in 2013/14, the IMF said.
It said growth was led by scaled-up public investment and a recovery of private consumption supported by stronger credit growth.
‘Strong growth and subdued inflation, alongside high international reserves (above four months of imports), a sound financial system, and relatively low government debt (currently at 30% of GDP) continue to provide buffers to shield the Ugandan economy against shocks. Nonetheless, there are risks to the outlook posed by domestic and regional uncertainties,’ Coronel added.
