COUNTRY REPORT Uganda At a glance: 2001-02 OVERVIEW The multiparty opposition remains active. As awareness of political alternatives in the country increases, tension between opposition groups and the government is expected to intensify. Uganda’s poverty reduction and growth facility (PRGF) under the IMF has been extended to end-March 2001, indicating that the Fund is satisfied with Uganda’s performance under the programme. Overall the macroeconomic outlook is fair, and real GDP growth is forecast to average 6.6% per year in 2001-02. However, inflation is forecast to remain at around 6% per year during the forecast period. Key changes from last month Political outlook • The political situation remains unchanged. It will become more heated as the presidential election in March 2001 draws nearer, and the opposition will increasingly question the constitution’s definition of democracy. Uganda’s involvement in the conflict in the Democratic Republic of Congo will continue to create problems for the government, as inter- national pressure mounts for the implementation of the Lusaka accord. Economic policy outlook • With the extension of Uganda’s PRGF programme, economic reforms— including an acceleration of the privatisation programme—will continue in 2001-02. • The privatisation programme is expected to make progress, and the unbundling of the Uganda Electricity Board into separate distribution, generation and transmission companies is scheduled to be completed by end-2001. Economic forecast • Real GDP is forecast to grow by 6.4% in 2001 and by 6.8% in 2002, owing to the recovery of the agricultural sector after the drought in 1999. Moderate rises in foreign investment and continued high levels of donor support will also contribute to overall economic activity. 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ISSN 1465-640X Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK Uganda 1 Contents 2 Summary 3 Political structure 4 Economic structure 4 Annual indicators 5 Quarterly indicators 6 Outlook for 2001-02 6 Political outlook 7 Economic policy outlook 8 Economic forecast 11 The political scene 20 Economic policy 23 The domestic economy 23 Economic trends 25 Agriculture and fisheries 27 Manufacturing 27 Mining 28 Infrastructure and services 28 Foreign trade and payments List of tables 8 International assumptions summary 10 Forecast summary 24 Total reserves, 2000 25 Consumer price inflation 26 International coffee prices List of figures 11 Gross domestic product 11 New Ugandan shilling real exchange rates 23 Exchange rate, 2000 EIU Country Report November 2000 © The Economist Intelligence Unit Limited 2000 2 Uganda Summary November 2000 Outlook for 2001-02 The political situation will become increasingly heated in the coming months as the presidential and parliamentary elections—which will probably take place in March and June 2001, respectively—draw nearer. Uganda’s involvement in the internal conflict in the Democratic Republic of Congo will remain a sore point for the government, and is likely to be accentuated in the forthcoming elections. Rebel activities in the north and west of the country continue. Real GDP growth is forecast to increase to 6.4% in 2001 and to 6.8% in 2002, owing to a recovery in agriculture and to large inflows for donor-funded infrastructure projects. Higher volumes of coffee exports will help offset the negative effects of lower coffee prices in 2001, as the current-account deficit improves to US$512m. However, the continued fall in prices in 2002 will lead the current- account deficit to worsen to US$533m. Total debt-service payments are esti- mated to fall from US$111m in 2000 to US$102m in 2001, owing to debt reduction under the heavily indebted poor countries initiative. The political scene The opposition has taken the government to task in the courts over the parliamentary procedures used to pass the Referendum Acts 1999 and 2000. This forced some quick manoeuvring in parliament, and the enactment of the Constitutional Amendment Bill 2000 has now legitimised the latter act. Corruption is becoming a larger issue, with the World Bank recently alleging that graft is rampant in Uganda. Economic policy The IMF has completed its first review of Uganda’s third annual arrangement under the poverty reduction and growth facility, and has approved the extension of the arrangement until March 2001, from the original expiry date of November 2000. The government will continue to focus on improving the collection of tax revenue. The domestic economy Tea output increased by 22% in January-August compared with the same period in 1999. An EU inspection team visited Uganda in early October to review lifting the partial ban on fish exports—a final decision is expected in November, and signs are positive. Manufacturing output fell by 11% between June and August, as the weak shilling hit the import-dependent sector. Annual headline inflation was 2.9% in September, down slightly from August owing to lower food prices. A new power-supply agreement with Kenya will increase electricity sales to 135mw by 2004. Foreign trade and Revenue from coffee exports has fallen by 46% in the current coffee year payments (October 1999-August 2000) against the same period in 1999, suffering from low international prices and lower-than-expected volumes, and the imports bill has continued to grow. Regional trading organisations are proving a challenge. Editors: Christopher Eads (editor); Pratibha Thaker (consulting editor) Editorial closing date: November 6th 2000 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule EIU Country Report November 2000 © The Economist Intelligence Unit Limited 2000 Uganda 3 Political structure Official name Republic of Uganda Form of state Unitary republic Legal system Based on English common law and the 1995 constitution National legislature Parliament of Uganda; 276 members, 214 elected by universal suffrage, with the remainder selected by electoral colleges; all serve five years National elections May 1996 (presidential); June 1996 (legislative); next elections due by 2001 (presidential and legislative) Head of state President, Yoweri Museveni; last presidential election May 1996 National government The president and his appointed cabinet; last reshuffle September 2000 Main political parties The Movement (formerly the National Resistance Movement) is the ruling authority, but not a formal political party; the Democratic Party (DP), the Uganda People’s Congress (UPC), the Uganda Patriotic Movement (UPM) and the Conservative Party (CP) are all registered political parties, but election candidates stand as independents President & commander-in-chief Yoweri Museveni Vice-president Specioza Kazibwe Prime minister Apollo Nsibambi First deputy prime minister & minister of foreign affairs Eriya Kategaya Second deputy prime minister & minister of internal affairs Brigadier Moses Ali Key ministers Agriculture, animal industry & fisheries Mugerwa Kisamba Education & sports Makubuya Kidhu Energy & minerals development Syda Bumba Finance,