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Uganda's Economic Growth Down to 3.5% - IMF

In 2016, the Ugandan government, the Bank of Uganda, the World Bank and the IMF, among others, all projected that Ugandas economy would grow between five and 5.5 percent, only to bring it down to 4.5 percent.

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The International Monetary Fund (IMF) has reduced Uganda's economic growth in the short-term to 3.5 percent, less than the earlier projection of 4.5 percent.

In 2016, the Ugandan government, the Bank of Uganda, the World Bank and the IMF, among others, all projected that Uganda's economy would grow between five and 5.5 percent, only to bring it down to 4.5 percent.

But addressing the media in Kampala after a two week review of the state of the economy, Axel Schimmelpfennid, the head of the IMF consultation mission which has been in Uganda for two weeks, says economic growth for this financial year is now estimated at 3.5 percent.

Schimmelpfennid says later in fiscal year 2017/18 growth would pick up to five percent driven by rebound in agricultural production and increase in private sector growth.

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On inflation, Schimmelpfennid says although food price inflation rose from five percent in September 2016 to 22 percent in April and headline inflation standing at 26.8 percent, the good news is that core inflation is still at 4.9 percent, within the target of five percent.

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Schimmelpfennid said with easing of monetary policy and inflation outlook being favourable, they believe the current monetary policy stance is appropriate.

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On fiscal policy, Schimmelpfennid says in 2016/17 fiscal deficit is likely to be lower than last year's review. He said good news is that domestic revenue mobilization is improving.

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The subdued economic outlook does not board well for Uganda's quest to become a lower middle income country by 2020.

According to both the IMF and the World Bank, for Uganda to achieve that feat, it has to register economic growth of more than 10 percent and sustainably for at least a decade.

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