The Minister for Finance, Matia Kasaija has hailed Uganda’s economy as one that is resilient, noting that it is projected to grow at 5.5%.
“Uganda’s economy has remained resilient, and is on a steady recovery path. The economy this year is projected to have grown by 5.5% compared to 4.6% last year. This year’s performance compares favorably with the average growth rate for Sub-Saharan Africa estimated at 3.6% for calendar year 2023,” Kasaija said on Thursday during the budget reading day.
According to the Finance Minister, Uganda’s economy is estimated to grow to a tune of shs184.trillion compared to the shs162.9 trillion for last year.
The minister attributed this state of affairs to the good performance of the services sector which he said grew at 6.2%, compared to 4.1% in the previous year.
“Agriculture has also performed strongly growing by 5.0%, despite the dry spell in the first quarter of the financial year. In particular, food crops, livestock and fishing performed well. Industry grew at 3.9%, driven largely by manufacturing and construction activities, especially in the oil and gas industry.”
In the recent months, inflation has been steadily easing.
Speaking on Thursday, the Finance Minister could not agree more, attributing this state of affairs to “well coordinated fiscal and monetary policy.”
“Inflation has significantly decreased since October 2022 when it peaked at 10.7%. Last month, the pace at which prices were rising slowed down to 6.2%. Prices of key items such as soap, sugar, fuel at pumps, among others, have significantly reduced,” Kasaija said.
“With respect to the cost of money, commercial bank lending interest rates have increased slightly to 19.3% in April 2023 from 18.8% in April 2022. This was mainly caused by the increase in the Central Bank Rate to 10% since October 2022, in order to fight inflation.”
According to Kasaija, to reduce the cost of money for the private sector, government has taken a deliberate policy to reduce domestic borrowing which is a major driver of commercial bank lending rates.