Uganda has recorded an increase in export value for two consecutive months, an indication the East African nation is emerging from the economic decline caused by the Covid19 pandemic.

According to the July ‘Performance of the Economy Report’ released by the Ministry of Finance, Planning and Economic Development (MoFPED), export earnings increased for the second consecutive month to $337.19 million in June 2020 from $290.93 million in May 2020.

Additionally, the value of imports increased to $543.6m in June from $435.6m in May.

Generally, the month of July registered improvement in economic activity and this has been majorly attributed to the easing of some of the containment measures that were instituted to prevent
spread of the virus.

MoFPED further says that monetary policy actions implemented by the government since April have also supported this improvement.

Specifically, the Bank of Uganda maintained the Central Bank Rate at 7 percent in July 2020 and continued to provide liquidity support to the banking sector.

To continue supporting economic recovery during the COVID-19 pandemic, the report says, the government plans to implement various fiscal measures in FY 2020/21.

For instance, the government is recapitalizing Uganda Development Bank, increasing funding to Uganda Development Corporation to facilitate public-private partnership investments as part of the import substitution and export promotion strategy, and it is expediting payment of arrears owed to the private sector in order to address liquidity constraints faced by suppliers of the government.

Sector breakdown

The report says the Annual Headline Inflation rose to 4.7 percent from 4.1 percent in June due to an increase in annual core inflation, which rose to 5.8 percent from 4.9 percent recorded in June 2020.

The shilling continued to strengthen against the US dollar in July, registering an appreciation of 0.9 percent on account of increased inflows amidst subdued demand.

“The shilling traded at an average mid-rate of Shs3,703.5 during the month compared to Shs3,737.9 recorded in June,” reads the report.

The average lending rates for both shilling and foreign currency-denominated credit edged upwards in June as banks are more risk-averse because of the COVID-19 pandemic, says the report.

Lending rates for shilling denominated credit rose to 19.3 percent in June from 18.8 percent recorded the previous month.

Similarly, according to the report, lending rates for foreign currency-denominated credit increased to 5.5 percent in June 2020 from 4.2 percent the previous month.

The stock of private sector credit grew by 4.1 percent to Shs 16.98 trillion in June from Shs 16trn in May.

New credit approved and extended in June amounted to Shs770.3 billion which was higher than the Shs589.5bn that was extended the previous month.

Yields (interest rates) on treasury bills edged upwards for all tenors with the 91,182 and 364-day recording values of 8.94 percent, 10.48 percent and 12.27 percent respectively from 8.69 percent, 10.31 percent and 12.13 percent respectively in June.

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