Ugandan finance minister to present economic recovery plan
Ugandan Finance Minister Matia Kasaija will today present a national budget and pending economic stimulus package to parliament.
The package, unveiled last week, is designed to provide cash-strapped private firms with liquidity during the pandemic-induced economic downturn. The deal would permit companies of varying sizes to defer tax and loan repayments for a limited period, and includes provisions for a special liquidity facility to buttress smaller enterprises that are especially vulnerable to reduced demand.
While data indicates some resiliency within Uganda’s agriculture and ICT sectors—due to relatively superior job security within the informal sector—the passage of supplementary fiscal stimulus would reinforce the flagging formal sector hit hard by travel restrictions and supply chain disruptions. Experts have recognised tourism, aviation and horticulture sectors as the most-affected areas of domestic activity; they collectively represent over one million at-risk jobs.
Expect the government to favour a medium-term import substitution policy in an effort to reduce foreign dependency, which could expedite support for sector players who invest in the ‘Buy Uganda, Build Uganda’ policy. Moreover, the Ugandan Development Corporation will likely purchase equity in suffocating firms to spark value addition in the coming weeks. While the likely passage of stimulus will provide some short-term relief, fiscal deficits could far exceed expectations and force response efforts back to the drawing board.
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