Ugandan Economy on Track for 6.5 Percent Growth, World Bank Says

The World Bank said Uganda’s economy is on course to expand in 2013-14 at the higher end of its forecast range, driven by growth in the services industry and investment in construction, energy and natural resources.

Gross domestic product will probably rise by 6.5 percent in the year through June from 5 percent a year earlier, the Washington-based lender said in a statement handed to reporters today in the capital, Kampala. In February, the bank forecast the economy would grow between 6 percent and 6.5 percent.

“The economy is progressively recovering, driven by renewed macroeconomic stability, export policies, increased access to credit and low inflation,” according to the statement.

Monetary policy easing by the central bank has increased the flow of credit to private investors, helping an economic recovery in the East African nation gain steam, the World Bank said. The central bank’s benchmark interest rate, which stands at 11 percent, has been lowered from a record 23 percent since the start of last year.

The country is emerging from “years” of unstable growth after a lack of controls over public expenditure caused donors to freeze aid and delayed investment, the bank said. The lender said in May that, at the request of the government, it plans to reduce allocations for budget support in favor of increasing investment to build infrastructure, support agriculture and promote skills development.

Production of oil, discovered in Uganda in 2006 by Tullow Oil Plc, is expected to start in 2018, Prime Minister Amama Mbabazi said at a press briefing today in Kampala. Tullow Oil, China National Offshore Oil Corp. and France’s Total SA are developing crude finds estimated at 3.5 billion barrels.

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