IMF executive board approves $240 million disbursement to Uganda

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The International Monetary Fund (IMF) said on Tuesday its executive board approved two reviews of a financing agreement with Uganda that allow for the immediate release of about $240 million to the East African country.

In December, Uganda and IMF staff had reached an agreement for the combined second and third reviews of its 36-month Extended Credit Facility, paving the way for the release of the financing, which brings total disbursements under the arrangement launched in June 2021 to $625 million.

"The Ugandan authorities have managed to preserve macroeconomic stability while sustaining the post-COVID-19 recovery despite rising pressure from global shocks and successive domestic shocks, including new public health challenges," the IMF said in a statement.

The Fund reiterated December forecasts that Uganda's economy will grow by 5.3% in the 2022/23 fiscal year starting last July, down from a 6.0% growth forecast issued in March 2022.

IMF Deputy Managing Director Bo Li said in a statement that Uganda met most quantitative targets, with a slight relaxation of fiscal deficit targets to support vulnerable households and provide public sector cost-of-living adjustments amid high inflation.

The IMF said the Executive Board also granted a waiver of nonobservance of a performance criterion on the stock of net international reserves of the Bank of Uganda.

Uganda's finance ministry projects economic growth for 2023/24 will be 6%, helped by increased activity in oil sector construction, growth in regional trade, and a rebound in agriculture. The government projects it will borrow some $2.6 billion for that fiscal year.

In recent years, Uganda has been taking on increasingly large amounts of debt, particularly from China, to finance energy, transportation and other infrastructure with officials banking on expected oil revenue to clear the debt.