IMF’s $1 Billion Program Expires, Denying Uganda Final Payout

(Bloomberg) -- An International Monetary Fund program for Uganda expired, denying the East African nation a final disbursement after it failed to meet key program objectives.

The $1 billion, three-year extended credit facility, which was secured in 2021, lapsed before a review that had been scheduled for June. Uganda had tapped $870 million from the program by the time the lender’s most recent appraisal was concluded in March.

“We have not concluded the sixth and last review, so there will be no disbursement,” Izabela Karpowicz, the IMF’s outgoing resident representative to Uganda, said in an emailed response to questions. “In the past we could give them more time, but since the program was expiring we could not do it this time.”

The IMF’s executive board is gathering Sept. 6 for so-called Article IV consultation, an assessment of a country’s economic and financial developments following staff meetings with lawmakers and public officials. Uganda’s deal was agreed in the wake of the Covid-19 pandemic to support the nation’s post-crisis recovery.

Under the financing package, Uganda agreed to lower its debt and budget deficit by cutting non-priority spending and increasing government revenue. Other targets included greater transparency in public accounts, instituting stronger anti-corruption measures and cultivating a resilient financial sector.

Rather than narrowing, Uganda’s budget financing gap will widen to 5.7% of gross domestic product this fiscal year, from 4.5% previously.

Karpowicz didn’t elaborate on what targets Uganda had missed.

Uganda’s Treasury has needed to diversify its funding sources since the World Bank said it wouldn’t grant new loans after the nation passed harsh anti-LGBTQ laws. The legislation is currently under review by the nation’s Supreme Court and the authorities say they are in talks with the lender about resuming financing.

Karpowicz said the IMF has yet to receive a request for a new program, negating assertions made by Secretary to the Treasury Ramathan Ggoobi in July that the two parties were already in talks about a package. Uganda has secured 12 rounds of financing since joining the IMF six decades ago.

Uganda will have a clear picture of what it needs from the lender before it holds its annual meetings next month, Bank of Uganda’s Deputy Governor Michael Atingi-Ego said in an interview in Mauritius on Thursday. 

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--With assistance from Kamlesh Bhuckory.

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