IMF sees Ugandan GDP growth picking up in 2016/17

Investment in infrastructure will help Uganda’s economy to grow by 5.5 percent in 2016-2017, faster than in the current fiscal year, the International Monetary Fund said on Wednesday.

The east African country has various multibillion dollar infrastructure projects in progress, including highways, hydropower dams and a crude oil refinery.

The IMF said at the end of a visit by its mission to Uganda that economic growth would accelerate next year from an expected 5 percent in the 2015/16 fiscal year that ends in June.

“In a complex global, regional, and domestic environment, affected by election-related uncertainties, Uganda’s economy continued to perform well,” a statement from the Fund said.

The IMF said this month’s cut in the central bank’s key lending rate to 16 percent from 17 percent would improve access to credit for the private sector and aid economic activity.

“The mission welcomes the decision by the Bank of Uganda to lower the central bank rate, consistent with the forecast of core inflation returning to its medium-term target,” it said.

“The appropriate easing of monetary policy should provide a welcome boost to private sector credit growth and support economic activity.”

Uganda’s central bank cited slowing inflationary pressures and below-potential economic growth as reasons for the rate cut.

Last month, headline inflation declined to 6.2 percent year-on-year from 7 percent in February.

The finance ministry forecasts the economy will grow by 5.8 percent in the year to June, from 4.8 percent in 2014-2015.