Govt fixes 2020/21 foreign exchange rate at Shs3,900

For planning purposes: Government will use the Shs3,900 shilling to dollar rate to plan for the 2020/21 financial year. PHOTO BY ERONIE KAMUKAMA  

 

\By MARTIN LUTHER OKETCH

The Ministry of Finance has said the dollar-shilling exchange rate for the 2020/21 financial year will
be pegged at Shs3,900.

The rate, which could be a signal of government’s projected movements, especially in the face of election inflationary pressures, will be a guide as government plans for the 2020/21 financial year.

The decision was reached during the second budget call circular on the finalisation of detailed budget estimates and ministerial policy statement for the 2020/21 financial year.

“For planning and budgeting purposes, the exchange rate for 2020/21 financial year will be $1 to Shs3,900,” the Finance Ministry said in the final circular signed by Permanent Secretary and Secretary to the Treasury Kieth Muhakanizi.

The circular also noted that the resource envelope for the 2020/21 financial year will be Shs41.9 trillion, which will include debt redemptions and non-tax revenues.

Government, according to the circular, will mobilise Shs33.167 trillion from internal sources while Shs8.769b will come from external funding.

The new pegging comes at a time when the shilling has remained largely stable with very minimal movements against the dollar.

According to Bank of Uganda, the shilling-dollar rate was relatively stable with a bias towards appreciation due, in part, to the increased inflows during the festive season.

In the quarter to January 2020, the shilling appreciated by 0.1 per cent to an average mid-rate of Shs3,680.8 per dollar.

In January alone, according to Bank of Uganda, the unit appreciated by 0.6 per cent on the account of inflows from offshore investors, non-governmental organisation and growth in export receipts amid subdued demand.

Development partners still play a big role in Uganda’s external budget support, which goes direct into the Treasury and project support that is channeled into different projects.

Mismatch in calendar budget approvals

The circular also noted that the Auditor General’s report had indicated that local governments had in the 2018/19 financial year failed to realise expected donor financing because of a mismatch in calendar budget approvals.
“Therefore, all accounting officers are strongly advised to engage donors to harmonise the calendars for the 2020/21financial year,” the Ministry of Finance said.

moketch@ug.nationmedia.com