Uganda’s Economy May Grow 6.8% in 2014-15 on Energy ExpansionFred Ojambo
Uganda’s economy is forecast to expand 6.8 percent in the next fiscal year as the government boosts investment in road, energy and farming projects to spur growth, according to the Finance Ministry.
Gross domestic product is projected to rise 6 percent in the year through June, “slightly lower” than previously projected, according to a pre-budget statement released today. Drought in parts of the country that has cut food and livestock production and conflict in the neighboring trade partner of South Sudan have hurt Uganda’s economy, according to the Kampala-based Finance Ministry.
“The focus of fiscal policy remains on sustaining efforts towards infrastructure development, especially roads and energy, and boosting agricultural production and productivity, which are vital to unlock the growth potential of the economy,” according to the statement.
Uganda faced disruptions in foreign aid flows in 2012 and last year over a corruption scandal and more cuts to external assistance this year after President Yoweri Museveni signed a law that strengthens punishments against homosexuality.
Spending, discounting debt payments, in 2014-15 is forecast to increase 10 percent to 14.3 trillion shillings ($5.7 billion), while the fiscal deficit excluding grants is expected to narrow to 5.5 percent of gross domestic product next year from 9.1 percent of GDP.
Revenue will grow to 10.1 trillion shillings from 8.8 trillion shillings in 2013-14. Donors are expected to fund 18 percent of next year’s budget, according to the statement.
Expenditure on energy will rise by 2 percent to 1.7 trillion shillings in 2014-15. The funding will partly go toward construction of the 600-megawatt Karuma and 183-megawatt Isimba hydroelectric plants, as well as the proposed 600-megawatt Ayago hydropower project, all on the Nile River, according to the Finance Ministry.
Uganda, Africa’s biggest robusta coffee exporter with a $20 billion economy, is classified by the World Bank as one of the world’s poorest countries.