International Monetary Fund approves UGX 3.5 trillion loan to Uganda

International Monetary Fund (IMF) has approved a UGX 3.5 trillion to Uganda aimed at curbing the effects of Covid-19.

This approval was passed yesterday by the Executive Board of the International Monetary Fund with the prime aim of helping the country to curb the diverse effects of the Covid-19 pandemic.

“The Executive Board of the International Monetary Fund (IMF) approved a 36-month arrangement under the Extended Credit Facility(ECF) for Uganda in an amount equivalent to SDR722 million (200 percent of quota or about US$1 billion) to support the post-COVID-19 recovery and the authorities’ plan to increase households’ incomes and inclusive growth by fostering private sector development,” read IMF’s statement in part.

According to the statement, $ 258 million is meant to be channeled to Uganda right away as a support for the 2021/22 Financial budget in a bid to help the country nurse the effects of the deadly virus.

Basing on the International Monetary Fund, the country’s economy has been severely hit by the pandemic which has crushed all it’s decade long endeavours to fight again poverty as well as opening up fiscal and external financial gaps.

“Fiscal consolidation, appropriately based on both revenue and expenditure measures during the first year of the authorities’ program, seeks to stabilize the public debt ratio while increasing social spending, including for vaccines. The implementation of the authorities’ Domestic Revenue Mobilization Strategy, better management of public investment, control of domestic arrears and advances in cash management will support the fiscal strategy,” said Tao Zhang, the IMF Deputy Managing Director.

Zhang adviced the importance of debt management with an aim of reducing debt management and also chances if increase in debt distress especially for a country like Uganda.

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“Prudent debt management is important to reduce vulnerabilities, particularly given Uganda’s moderate risk of debt distress. Every effort should continue to be made to seek concessional financing and pursue relief under the Debt Service Suspension Initiative. Contingency plans put in place would help mitigate risks.”

Additionally, Mr. Zhang said that despite the fact that Uganda has made progress in regards to information audits as well as expenditure of covid-19 funds, he believes the country still needs to do more so as to ensure accountability.

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