Uganda budget deficit could narrow to 6pc

Tuesday January 8 2019

karuma underground

Engineering works in progress at the 600MW Karuma underground surge chamber. Uganda is concluding investments in two big hydropower projects — Karuma and the 183MW Isimba plant. FILE PHOTO | NMG 

The EastAfrican
By The EastAfrican
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Uganda’s budget deficit may narrow to six per cent of GDP in 2019-20, as the country concludes investments in two big hydropower projects, the Finance Ministry has said.

The financing gap in the 12 months through June 2020 may drop from 6.6 per cent of GDP this fiscal year as the government completes the 600MW Karuma and 183MW Isimba plants, according to the National Budget Framework Paper on the ministry’s website.

The fiscal shortfall is expected to gradually narrow to 2.6 per cent of GDP in 2023-24 on the phased reduction in big public investment projects, according to the pre-budget document.

Uganda sees resources in the coming fiscal year rising to Ush34.3 trillion ($9.2 billion) from Ush32.7 trillion ($8.78 billion) in 2018-19, according to the document.

Africa’s biggest coffee exporter will allocate Ush2.9 trillion ($778.9 million) for interest payments in the next fiscal year, of which Ush402.4 billion ($107.9 million) will be for external loans, the ministry said.

Meanwhile, the African Development Bank economic outlook for Tanzania predicts that the economy will grow slightly to 6.9 per cent in 2019, from 6.7 per cent in 2017, representing one of the best performances in East Africa.

A tightening trade deficit, with a drop in imports outweighing a decline in exports, is likely to support growth.

The bank says uncertainty in the business environment especially faltering private sector credit growth, is likely to deter private sector growth in 2019.

Infrastructure projects

Public investment, particularly with ongoing implementation of larger infrastructure projects, is expected to boost growth in 2017 and beyond.

Tanzania is implementing a mega construction project in power generation at Stiegler’s Gorge alongside the standard gauge railway.

Tanzania economy grew by 7.1 per cent in 2017 compared with seven per cent the two previous years consecutively.

Minister for Finance and Planning, Dr Phillip Mpango said last week that from January to June 2018, national GDP grew by seven percent as compared with 6.3 per cent in the same period the previous year.

Drivers for growth were construction, which grew by 15.7 per cent, industrial production (12 per cent), information and communication (11.2 per cent) and transportation (8.2 per cent).

In Kenya, provisional estimates by the Kenya National Bureau of Statistics (KNBS) show the economy expanded by six per cent during the three-month period from July-September, 2018 compared with a growth rate of 4.7 per cent in the same period in 2017.

The improvement in the economic growth, according to the statistics body, was due to the growth in the agriculture, construction and manufacturing sectors.

Agriculture grew by 5.2 per cent compared with a growth of 3.7 per cent in the same period in 2017.

The growth in the sector was supported by increased production of key cash crops such as tea, coffee and fruits and while cut flowers and vegetables recorded marginal declines in production.

The manufacturing sector recovered from a decline of 0.1 per cent to grow by 3.2 per cent.

In 2017, Kenya’s growth slowed to a five-year low of 4.9 per cent in 2017 from 5.9 per cent in 2016, according to the country’s Economic Survey Report 2018.

By‎ Bloomberg, James Anyanzwa and Chris Kidanka