Increase savings, IMF advises Uganda

 

Power lines in Jinja. Construction of the Karuma hydro power project should have started in May 2012. PHOTO BY ABUBAKER LUBOWA 

 

By MARTIN LUTHER OKETCH
 

 

In Summary

Both public and private savings are still low by international standards

Kampala

The International Monetary Fund (IMF) has urged Uganda to increase both its public and private savings to reduce dependence on external saving.

The IMF senior resident representative and mission chief for Uganda, Ms Ana Lucía Coronel, says government should conduct a study aimed at phasing out unnecessary tax exemptions.

The deputy Governor Bank of Uganda, Mr Louis Kasekende, said the levels of public savings are about 6-7 per cent while that of private saving currently stands at 12 per cent of the Gross Domestic Product (GDP)—a measure of the economy’s performance. “We must reduce on both private and public consumption,” he said.

The ratio of both public and private savings to the GDP remains low by international standards. The IMF says this increases Uganda’s vulnerability to exogenous shocks that may occur in the global economic system.

There are hopes that the Public Finance Management Bill, when passed into law by Parliament, will lead to better management of public finances in Uganda. The government has planned to borrow up to Shs1.4 trillion by issuing Treasury Bills and Bonds In the next financial year.