Uganda inflation Down to 3.6% from 18%, Says Kiwanuka

The Uganda Budget which was unveiled at the Parliament buildings by the Finance Minister Maria Kiwanuka was said to be in line with the new blue print of vision 2040. In her opening remarks to the long budget speech Kiwanuka said that the budget seeks to provide a roadmap to transform Uganda from a low income to a modern middle income country within 30 years.

The NRM government underlines that Vision 2040 requires a fundamental change on the way of doing things by Government and the Private Sector, to unlock the binding constraints to Uganda’s progress.

Like Kenya’s Treasury Secretary Henry Rotich,  Kiwanuka noted to the Uganda Parliament that the budget is faced by several constraints and however the challenges are to be dealt with positively.

“There are no quick answers to the challenges that face us today. The economic and social challenges we are working to address happened over several years and will take time to resolve. This requires patience and coordination. The Financial Year 2013/14 Budget seeks to continue towards socio-economic transformation, one step at a time,” said Kiwanuka.

Uganda earmarked the budget as “The Journey Continues: Towards Socio-Economic Transformation for Uganda” appreciating the newly launched development journey to the full realization of the vision 2040 which is believed to have been drawn from Rwanda’s 2020 and Kenya’s 2030.

“The Financial Year 2013/14 Budget, like the one last year, will continue to focus on translating the Government’s strategic priorities into practice over the next year. Scarce resources have must allocated to reflect key Government strategic priorities within existing resource constraints,” said Kiwanuka.

Key Achievements in FY2012/13

The Ugandan economy grew at 5.1% in the FY2012/13 and the Treasury reported the Inflation to have subsided and was recorded at 3.6% as at end-May 2013compared to 18.0% at the start of the financial year, a marked reduction from double digits at the start of the financial year.

The minister farther told the parliament that the volatility of the Uganda exchange rate subsided and currently averages around Ugx2575, however the government ought to do more to invest on confidence on the investors.

The NRM has argued that the now fading Fiscal year, there was significant progress in the implementation of budget for financial year now ending.

“In the works and transport sector, 845KMs of several national roads were fully or substantially completed; or have their construction on schedule. Construction of a further 88 km of national roads will commence shortly having had their contracts signed,” said Kiwanuka.

However the NRM government told Parliament that the designs for 723 kms of several national roads has been completed, and procurement for contractors will commence and in addition the rehabilitation of the Marine Vessel Kaawa was completed during the year, and now operates between Port Bell and Mwanza.

Inflation and Interest Rate Developments

Uganda registered investment rate rose to 25.2% of GDP compared to 24.5% in the previous year

However the finance Minister projected that the treasury oversights to see the achievement of real economic growth of at least 7% per annum; Keep annual consumer price inflation to within single digit; The maintenance of a prudent level of foreign exchange reserves of at least five months import cover, to mitigate external shocks and the maintenance of a competitive real exchange rate to support the growth of exports.

She however told the parliament that the economy is expected to accelerate its recovery to an estimated growth rate of 6.0 percent per annum next financial year.

“This continued recovery in growth is premised on maintaining macroeconomic stability, and improving resource mobilization and utilization. In addition, investment in priority sectors including the commencement of major infrastructure projects will spur economic growth,” said Kiwanuka

She projected that the government wishes to fast track the inflation to attain an  average about 6% p.a next financial year and around 5% over the medium term, and therefore she deemed the exchange rate to be a key determinant of economic competitiveness and has a major effect on the resource envelope.

Inflation in Uganda also remains to be the most constrain in the Ugandan budget and going with the projection by the finance Minister Maria Kiwanuka then is expected to remain stable owing to the improvement in the trade balance.

 

For Budget 2013/14 see Uganda budet analysis

 

 

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