The Executive Board of The International Monetary has approved a fund of USD I Billion to aid Uganda to support the response to the ongoing COVID-19 Pandemic.
The Extended Credit Facility package will also help the country in recovering from the economic shock caused by the ongoing global Pandemic.
The package is a three year stimulus package that will be disbursed to the East African country to help address the short term effects of COVID-19 on the economy and support the “post-COVID-19 recovery and the authorities’ plan to increase households’ incomes and inclusive growth by fostering private sector development.”
The package will see $258M disbursed immediately to support the fiscal budget while the remaining money will be released in pre approved quotas in the period of 36 months.
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Uganda is one of the countries that were hit hard by the pandemic with the economy locked down two times in the period of 15 months. IMF says that the progress against poverty that the country had gained in the recent years have all been reversed by the pandemic which has increased poverty levels.
“Uganda’s economy was hit hard by the COVID-19 crisis. Decade-long gains in poverty reduction were reversed, fiscal balances have deteriorated, and pressures on external buffers have intensified. A mild recovery is underway in some sectors, with economic growth in FY 21/22 expected to reach 4.3 percent before returning to pre-pandemic rates of 6-7 percent in the medium term. The outlook remains highly uncertain, with risks tilted to the downside, including from a resurgence of tighter containment measures linked to higher COVID-19 positivity rates.” IMF said in a statement.
IMG’s ECF therefore seeks to help increasing household incomes, zeroing the impact of COVID-19 and helping the country in fighting COVID-19.
“The Extended Credit Facility focuses on keeping public debt on a sustainable path while improving the composition of spending and advancing structural reforms to create space to finance private investment, foster growth and reduce poverty.” continued the statement.