Uganda Reports Strong Economic Growth and Fiscal Discipline in Q3 2023/24

by Business Times
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In a press briefing on Monday, January 29, 2024, Ramathan Ggoobi, the Permanent Secretary/Secretary to the Treasury, unveiled a robust update on Uganda’s economic performance and the fiscal trajectory for the third quarter of the fiscal year 2023/24.

Economic Resilience and Growth:

Uganda’s economy has successfully rebounded from previous shocks, boasting a commendable growth rate of 5.2% by June 2023. The economy reached an impressive Shs 184.89 trillion (US$49.5 billion), propelled by significant contributions from the services sector (6.2%) and agriculture (4.8%).

Positive Economic Indicators:

The Composite Index of Economic Activity (CIEA) showed a positive trend, increasing by 0.2%. Additionally, the Purchasing Manager’s Index (PMI) demonstrated robust economic conditions, rising to 54.8 in December 2023.

Inflation and Financial Stability:

Annual headline inflation remained stable at 2.6% in December 2023. Noteworthy shifts included a decline in Food crops inflation, while core inflation and Energy Fuel and Utilities (EFU) inflation increased. The financial sector remained stable, with the Ugandan Shilling holding its ground. Adjustments in lending rates for both shilling and foreign currency denominated credit were reported.

Revenue Challenges and Supplementary Budget:

Cumulative revenue collections for July to December 2023 amounted to Shs 13.301 trillion, indicating a shortfall of Shs 867.91 billion. This deficit was primarily attributed to lower customs duties and VAT collections. To address critical needs, Parliament approved a Supplementary Budget of Shs 3.492 Trillion, redirecting funds to World Bank projects, policy commitments, and crucial statutory/security-related expenditures.

Q3 Expenditure Allocation and Priorities:

Of the approved budget of Shs 52.736 trillion for FY 2023/24, Shs 19.921 trillion (77.8%) has been allocated as of Q3. The third-quarter expenditure, totaling Shs 4.974 Trillion, prioritizes wage, security, health, education, and critical capital expenditures.

Wage expenditure received Shs 1.912 Trillion, constituting 26.2% of the wage budget, based on the Audit report on Wage payroll. Notable releases include Ushs 550.859 billion for security operations and Shs 230 billion for statutory votes.

Pension, Local Government Grants, and Education received significant allocations, with Shs 296.578 billion for pension and gratuity, Shs 249.294 billion for Local Government Grants, and Shs 117.567 billion for Education Institutions.

Development Expenditure highlights include Shs 192 billion for the renewal of National IDs and Shs 305.716 billion for the UGIFT program.

Parish Development Model Implementation:

The Permanent Secretary outlined the Stabilization Phase (FY 2023/24 – 2024/25) of the Parish Development Model (PDM), emphasizing SACCO capitalization, Business Development Services, governance strengthening, data accuracy on PDMIS, digital system utilization, community savings, and collaboration promotion.

Fiscal Discipline Emphasis:

Permanent Secretary Ggoobi stressed the importance of fiscal discipline across Ministries, Departments, and Agencies (MDAs), urging timely payments, transparent display of payrolls, prioritization of service providers, and effective program supervision.

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