Today, the government of Uganda released its first estimates of how deep COVID-19 could hurt Uganda’s economy. The figures released by Uganda’s Finance Minister, Matia Kasaija are based on two scenarios- namely;
OPTIMISTIC SCENARIO: That the corona virus does not enter Uganda or that it is quickly contained hence avoiding widespread infections within the population.
WORST-CASE SCENARIO: The “virus enters Uganda and spreads rapidly (as experienced in some African countries such as Egypt, South Africa and Algeria), in which case, the impact on the economy, the budget and the population would be significantly higher.
Here below are some of the key figures:
- Government warns of a severe reduction in exports, tourism receipts, and workers remittances;
- Foreign exchange reserves to decline from 4.2 future months of imports to about 3.5 months;
- Loan disbursements projected to decline by 50 percent in the last five months of FY2019/20;
- Current account balance (CAB) in FY2019/20 is projected to widen by USD 363.1 million (12.7%);
- Banking industry non-performing loans could worsen from 4.7% to 5.9%;
- Imports expected to decline by 44% in the last four months of FY2019/20 hurting domestic revenue, thereby hurting government tax revenue;
- Conservatively, government to experience revenue shortfalls of UGX82.4 billion for the remaining period of the FY2019/20 March-June) and about UGX187.6 billion in FY2020/21;
- Advanced COVID-19 prevalence could cause wider domestic revenue shortfalls by as much as UGX288.3 billion in FY 2019/20 and UGX350 billion in FY2020/21;
- Preliminary economic growth for FY2019/20 revised downwards from 6.0 percent to between 5.2- 5.7 percent depending on the severity of the COVID-19 impact on Uganda;
- In a worst-case scenario, COVID-19 could hurt Uganda’s growth prospects, to between 4.6% and 5.1%, thereby pushing up to 2.6 million into poverty;
- Government to borrow a combined USD190 million (UGX725 billion) from World Bank in budgetary support for FY2019/20 and FY202/21;
