| A contractor assemble steel for the construction of Karuma 600 megawatts hydroelectric power project under construction on River Nile, Uganda February 21, 2018. REUTERS/James Akena |
Uganda’s economy is expected to grow 6.3 percent in the 2018/19 (Jul-Jun) fiscal year, slightly higher than the 2018 rate, helped by robust activity in sectors including manufacturing and construction, the IMF said on Thursday.
Growth in the 2017/18 fiscal year was 6.1 percent. Inflation is expected to climb but flatten out around the central bank’s target of 5 percent over the next 12 months, according to the International Monetary Fund.
“Credit to the private sector has improved, helped by a supportive monetary policy stance. Growth is projected at 6.3 percent in FY18/19, as manufacturing, construction, and services continue to expand,” an IMF statement said.
The East African country badly needs a high and sustained economic growth rate to help generate healthy revenues to defray its ballooning public debt load.
The Finance Ministry says Uganda’s debt stands at 41.5 percent of GDP but the central bank has said it believes public indebtedness has already topped 50 percent of the nation’s economic output.
The IMF said growth could hit 7 percent over the next five years “if infrastructure and oil sector investments proceed as planned, and private sector credit remains supportive”.
Uganda expects to start pumping crude oil by 2022 at the latest from fields in western areas near the border with Democratic Republic of Congo.