Uganda Weathering Impact of Global Financial Crisis - IMF

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The Ugandan economy is weathering the impact of the global financial crisis better than expected.
This is the assessment of Martine Guerguil, the International Monetary Fund (IMF) mission chief for Uganda. In a statement issued following the just ended visit of the a mission from the IMF African department, Ms. Guerguil said that despite a slowdown in growth, economic activity has remained strong by regional and international standards.
In the 2008/2009 financial year Uganda's real gross domestic product growth reached 7.1 percent. The Ministry of Finance, Planning and Economic Development projects that growth will decrease slightly to 6.3 percent this financial year before rebounding to its potential of 7 percent in the following years.
The statement from the IMF says it shares the concern of Ugandans about the recent surge in food prices. It recognizes that the resulting high level of headline inflation is clearly driven by drought-related factors, and so it welcomes the continued decline in core inflation.
Martine Guerguil said the decline in core inflation is evidence that the Bank of Uganda's monetary policy framework is appropriate. She said the main challenge for monetary policy will be to prevent the high levels of food price inflation from spilling over to underlying, core, inflation.
The mission from the IMF Africa department held a series of meetings with Finance Minister Syda Bumba, the Governor of the Central Bank, Emmanuel Tumusiime Mutebile and other senior government officials. They reviewed the Ugandan Policy Support Instrument in view of a possible renewal next year.
The Policy Support Instrument enables the IMF to support low-income countries that do not want or need financial assistance. It helps countries design effective economic programs, which once approved, can be used to inform the decision of private creditors, official donors or international investors.