KAMPALA – Finance Minister Matia Kasaija has revealed that the outbreak of Covid-19 negatively impacted economic activity with real GDP growth declining to 2.9% in FY 2019/20.
Flanked by Acting Secretary to the Treasury Patrick Ocailap, Kasaija was on Wednesday making a statement on implementation of the NRM Manifesto commitments 2016 to 2021.
He, however, expressed optimism saying the economy is expected to gradually improve over the medium term with real GDP growth being projected at 3.1% in FY 2020/21 and to further increase to the potential of 6% to 7%.
Kasaija said the positive outlook is premised on better economic prospects in the oil and gas sector following the completion of the final investment decision (FID) and the on-going Covid-19 vaccination.
The Minister said the Central Bank Rate (CBR) was reduced to 7% since June,2020 from 17% in January 2016,adding that the low and stable inflation outlook provided room for a reduction in the policy rate to support economic growth.
Average annual headline inflation for the period 2016 to 2020 remained low at 4.3% due to prudent macroeconomic policy as well as increased supply of agricultural produce to the market which brought down food prices.
“The lending rates declined to 19.3% in FY 2019/20 from 24.0% in FY 2015/16,” he said, adding that the stock of private sector credit as at June 2020 was recorded at Ushs.17.3 trillion from Ushs.11.9 trillion in January 2016.
Government also increased the capitalization of Uganda Development Bank from Ugx.58.3 billion in FY 2019/20 to Ugx.103 billion in FY 2020/21. In FY 2020/21 government has so far disbursed above Ugx.500 billion to capitalize UDB.
Regarding Microfinance Support Centre (MSC),the Minister said capitalization has increased overtime from Ushs.4.9 billion in FY 2016/17 to Ushs.341 billion in FY 2020/21.
As at 31st March 2021, (MSC) had disbursed UGX 196.96 billion to 6,344 Constituency based SACCOs in 347 Constituencies,146 districts including cities.