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IMF declines to sign off on Uganda economic policy

By on February 12, 2011

The International Monetary Fund on Friday said it had not completed a recent evaluation of Uganda’s economy because the country’s economic policies are “inconsistent” with those previously agreed with the fund.

The IMF did not say which policies it was unhappy with, but said a mission would again visit the Central African country in March.

Uganda, which is set to begin pumping oil next year, is preparing for February 18 general elections, widely expected to give President Yoweri Museveni a fourth term.

The IMF conducts regular assessments of Uganda’s economy under a so-called Policy Support Instrument (PSI) agreed in May last year.

The PSI is for poorer countries who do not need IMF financial support, but want the IMF’s stamp of approval on policies to reassure donors, investors and markets.

In a brief statement, the IMF said it had not signed off on the review.

“The executive board did not complete the first review of Uganda’s PSI because it judged Uganda’s macroeconomic policies to be inconsistent with the objectives spelled out in their PSI-supported economic program,” an IMF spokesman said.

“Discussions between IMF and the authorities on the macroeconomic framework will continue in the context of the second review,” he added.

In a statement in May, the IMF said the PSI for Uganda aimed to maintain economic stability and ease constraints to growth by increasing public investment spending and reforms.

It also focused on strengthening institutions ahead of expected oil production and Uganda’s participation in the future East African Monetary Union.

The government intervened last month to stabilize its currency, the shilling, which hit a record low of 2,395/2,400 as importer demand for dollars rose. The central bank blamed foreign speculators for the fall.

Meanwhile, Uganda’s inflation rate rose for a third consecutive month to 5.0 percent in January from 3.1 percent in December due to seasonal food shortages.


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