The Minister for Finance, Matia Kasaija, has expressed satisfaction with Uganda's resilient economy, projecting a growth rate of 5.5% for the current year. During the budget reading day, Kasaija highlighted the positive trajectory of the country's economy and its expected performance.
"Uganda's economy has remained resilient and is on a steady recovery path. The economy this year is projected to have grown by 5.5% compared to 4.6% last year. This year's performance compares favorably with the average growth rate for Sub-Saharan Africa estimated at 3.6% for calendar year 2023." Kasaija stated.
He further revealed that Uganda's economy is estimated to reach a staggering shs184 trillion, a notable increase from shs162.9 trillion recorded last year. The Finance Minister attributed this positive outlook to the robust performance of the services sector, which experienced a growth rate of 6.2% compared to 4.1% in the previous year.
Additionally, the agricultural sector demonstrated resilience by growing at 5.0% despite facing challenges such as a dry spell during the first quarter of the financial year. Food crops, livestock, and fishing contributed significantly to this growth. The industry sector, driven by manufacturing and construction activities, particularly in the oil and gas industry, grew at a rate of 3.9%.
Inflation, an important economic indicator, has been showing signs of improvement in recent months. Kasaija acknowledged this positive trend, crediting it to the "well-coordinated fiscal and monetary policy" of the government.
"Inflation has significantly decreased since October 2022 when it peaked at 10.7%. Last month, the pace at which prices were rising slowed down to 6.2%. Prices of key items such as soap, sugar, and fuel at pumps have significantly reduced," Kasaija stated.
The Finance Minister further explained that the slight increase in commercial bank lending interest rates, from 18.8% in April 2022 to 19.3% in April 2023, was mainly caused by the Central Bank's decision to raise the Central Bank Rate to 10% since October 2022 to combat inflation.
To alleviate the burden of high interest rates on the private sector, the government has implemented a deliberate policy to reduce domestic borrowing, which is a significant driver of commercial bank lending rates.
With Uganda's economy showing resilience and a projected growth rate of 5.5%, the country seems well positioned to navigate its path to sustained economic development. The positive performance in various sectors and the government's focus on fiscal and monetary policies demonstrate a commitment to maintaining Uganda's upward trajectory.
