Ugandan economists stress the importance of prudent fiscal management in the face of global challenges. They highlight the country’s past responses to crises as lessons unheeded. Calls for reduced government spending and increased local investment are prominent as the nation prepares for impending economic transitions, particularly with the oil sector on the horizon.
In response to ongoing global economic turmoil, economists in Uganda are urging the government to adopt more prudent fiscal policies and manage spending effectively. This advice comes amid a backdrop of reduced international aid, particularly from the United States due to significant fiscal cuts, impacting many nations, including Uganda, which faces increased government expenditure associated with the election cycle.
Dr. Fred Muhumuza, an economic researcher, highlighted Uganda’s relatively stable maneuvers during the COVID-19 pandemic and the ongoing conflict in Ukraine. He criticized the government for failing to extract meaningful lessons from these experiences. Muhumuza urged a reallocation of resources, emphasizing that the government could save substantial funds by curtailing unnecessary expenditures, such as its extensive vehicle fleet.
Dr. Muhumuza noted that optimism in Uganda is often linked to natural resources but stressed that the nation must be proactive in managing future economic challenges. While Uganda receives over $1.2 billion from the US, with a significant portion directed towards governmental programs, he contended that the focus should be on the judicious allocation of these funds and reducing reliance on external assistance.
Notably, Dr. Adam Mugume of the Bank of Uganda expressed a more restrained view on the potential impacts of reduced US aid, insisting that it would not be catastrophic but reiterated the necessity for the country to decrease its dependence on foreign support. Economists from Stanbic Bank maintained an optimistic growth forecast for Uganda, attributing it to strong exports of coffee and gold, though they warned of inherent risks like fluctuating global prices and adverse weather conditions.
The anticipated oil and gas sector revenue, set to commence in 2027, was acknowledged as a potential economic booster. However, it was noted that sustainable growth hinges on timely investments in critical infrastructure, including the oil refinery and pipeline. Past lessons from the 2011 elections, notably the ensuing hyperinflation, were recognized by Dr. Mugume, who asserted that improved economic management has stemmed from these experiences.
Dr. Sebastien Walker from the IMF advocated for bolstering local investor growth for economic sustainability. He emphasized that addressing governance issues, reducing corruption, and enhancing human capital are paramount. Francis Karuhanga, Chief Executive of Stanbic Uganda Holdings Ltd., urged that Uganda’s economic strategy should consider regional geopolitical dynamics, such as the conditions in the Democratic Republic of Congo and South Sudan, as they significantly affect local stability and business growth.
In summary, Ugandan economists call for increased fiscal discipline and resource management in light of ongoing global economic pressures. While opportunities exist, particularly in exports and the oil sector, careful navigation of both local and regional factors is essential. Addressing governance and local investment will be crucial for sustainable economic growth, as Uganda looks to learn from past challenges and adapt for future resilience.
Original Source: www.independent.co.ug
