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Uganda shows signs of positive economic growth

Moody’s has recently adjusted the country’s strength downwards to ba3 from ba2 stable

Uganda is reported to be one of the few economies in the world to demonstrate positive economic growth despite the coronavirus pandemic. It is reported that the African economy is recording a growth rate of 3 percent against a 7 percent target rate. But Moody’s has recently adjusted the country’s strength downwards to ba3 from ba2 stable. The downgrade is largely attributed to its low productivity and high transport costs, media reports said. Although the pandemic’s impact is on its short-term outlook, rising political instability could disturb its economic conditions. 

Strong fiscal strategy is expected to drive the country’s growth rate with a primary focus on increasing the domestic revenue. The country aims to increase the domestic revenue from 13 percent to 18 percent in the next five years, Uganda’s Finance Minister Matia Kasaija told reporters during the National Budget Conference. 

“We shall aim to protect as well as create more jobs while focusing on agricultural production and agro-industrialisation. The economy will be in position to create 50,000 quality jobs, especially for our young people,” Kasaija said. 

Uganda’s economic growth had decelerated to 3.1 percent during the fiscal year of 2019-2020. The government has also introduced a stimulus package in an effort to support medium and large-scale enterprises. Also, it is reported that companies borrowing from the Uganda Development Bank will be given an extension grace period of one year before their loan repayment begins. In addition, Uganda plans to bring down external borrowing to sustainable limits while focusing more on concessional funding and reappraising public investment needs.

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