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Uganda Uganda at a Glance: 2005-06

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Uganda Uganda at a Glance: 2005-06 Country Report Uganda Uganda at a glance: 2005-06 OVERVIEW The president, Yoweri Museveni, has given his clearest indication yet that he will stand for a third term at the presidential election scheduled for 2006. The constitution will have to be amended to allow for this. Owing to the government’s large majority in parliament and the considerable amount of resources that Mr Museveni’s supporters are currently dedicating to increasing their support, parliamentary approval of the necessary constitutional amendments is probable. Once the amendments have been passed in parliament, a national referendum will be held, when a large majority of the Ugandan public is likely to vote in favour of them. Owing to the power of incumbency and strong rural support, it is likely that Mr Museveni and his National Resistance Movement Organisation will be victorious in the presidential and legislative elections. However, they face a stiff challenge from the Forum for Democratic Change. Economic growth is expected to improve slightly, to 5.3% in 2005 and 5.6% in 2006, supported by continued growth in manufacturing, construction, transport and communications. A current-account deficit of 4.2% of GDP is forecast for 2005, widening to 5.4% of GDP in 2006 as strong economic growth and election-related spending lift import demand. Key changes from last month Political outlook • There have been no major changes to the Economist Intelligence Unit!s political outlook. Economic policy outlook • With the appointment of Ezra Suruma"who is known to be in favour of state intervention in the economy"as the new minister of finance, donors may worry that a shift in economic policy is being considered. This could affect the inflow of financial assistance on which Uganda depends. Economic forecast • The poor rainfall that led to increases in food prices in the second half of 2004 has continued into early 2005. As a result, we have raised the forecast for average inflation to 7.3% in 2005, from our previous forecast of 5.4%. Even assuming a return to normal rainfall patterns, average inflation is expected to remain relatively high in 2006, at 5.8%, as pre-election spending increases and the cost of imports rises as the shilling depreciates. April 2005 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1007 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7830 1023 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2005 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. ISSN 1465-640X Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK. Uganda 1 Contents Uganda 3 Summary 4 Political structure 5 Economic structure 5 Annual indicators 6 Quarterly indicators 7 Outlook for 2005-06 7 Political outlook 9 Economic policy outlook 11 Economic forecast 14 The political scene 24 Economic policy 28 The domestic economy 28 Economic trends 29 Agriculture 30 Manufacturing 30 Energy 30 Infrastructure 31 Foreign trade and payments List of tables 11 International assumptions summary 13 Forecast summary 15 Key ministries after the reshuffle 32 Trade deficit List of figures 13 Gross domestic product 13 Consumer price inflation 28 Annual headline rate of inflation Country Report April 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005 Uganda 3 Uganda April 2005 Summary Outlook for 2005-06 The president, Yoweri Museveni, and his Movement-led government are expected to remain in office throughout the forecast period. Although the opposition parties are expected to pose a stiff challenge, particularly the Forum for Democratic Change (FDC), it is likely that Mr Museveni, who is expected to be allowed to stand for a third term, and his reconstituted Movement party will win the presidential and legislative elections expected in mid-to-late 2006. Real GDP growth rates of 7-8% per year are required to make an impact on poverty but, although it will continue to pursue many of the reforms advocated by donors, the government is unlikely to execute the bolder reforms needed to raise the growth rate to such a level. Economic growth will therefore remain in the range of 5-6% per year over the forecast period, supported by strong export performance and continued growth in manufacturing and construction. The political scene The president has boosted his support in a cabinet reshuffle that has rewarded those loyal to him rather than those most capable. Kizza Besigye has been chosen as the leader of the FDC, although the government is likely to attempt to make his return from exile difficult. The stuttering peace negotiations with the Lord’s Resistance Army are dragging on. A UN report has accused Uganda of illegally selling arms to militias in the Democratic Republic of Congo. Economic policy The appointment of Ezra Suruma as minister of finance has raised fears that a shift in economic policy towards greater state intervention is on the horizon. The latest IMF report on Uganda has called for new reforms to boost economic development. In an attempt to cut the cost of borrowing, the Bank of Uganda has announced plans to take billions of shillings of project funds away from the country’s commercial banks. The domestic economy Adverse weather conditions, and the ensuing food shortages, have raised inflation. The government has reintroduced crop subsidies, a move likely to be unpopular with the donor community. Continuing power shortages have forced electricity exports to stop. Foreign trade and payments Coffee exports have benefited from better prices, and non-coffee exports are also performing well. However, import growth has surged and the trade deficit has widened. The East African Community customs union has come into effect, but disagreements over its implementation remain. Editors: Philip Walker (editor); Christopher Eads (consulting editor) Editorial closing date: April 11th 2005 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule Country Report April 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005 4 Uganda 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; 282 members: 214 are elected by universal suffrage; the remainder are selected by electoral colleges; all serve five years National elections March 2001 (presidential) and June 2001 (legislative); next elections (presidential and legislative) due in mid 2006 Head of state President, elected by universal suffrage for a five-year term National government The president and his appointed cabinet; most recent reshuffle in January 2005 Main political parties Anticipating a return to a party system during 2005, the ruling authority, the Movement, has registered as a political party under the name the National Resistance Movement Organisation (NRMO). Of the traditional parties, the Uganda People’s Congress (UPC), the Democratic Party (DP) and the Conservative Party (CP) have also registered, together with a number of new parties, the largest of which is the Forum for Democratic Change (FDC) President & commander-in-chief Yowe ri Museveni Vice-president Gilbert Bukenya Prime minister Apollo Nsibambi First deputy prime minister & minister of disaster preparedness & refugees Lt-General Moses Ali Second deputy prime minister & minister of public service Henry Kajura Key ministers Agriculture, animal industry & fisheries Janat Mukwaya Defence Amama Mbabazi Education & sports Namirembe
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