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List of Acronyms

Acronym Expansion
B.Franc Burundian Franc
BOU Bank of Uganda
BTI Business Tendency Index
CBR Central Bank Rate
CIEA Composite Index of Economic Activity
EAC East African Community
EFU Energy, Fuels and Utilities
FOB Free on Board
FX Foreign Currency
FY Financial Year
GBP British Pound Sterling
ICBT Informal Cross Border Trade
KShs Kenyan Shilling
MDAs Ministries, Departments and Agencies
MOFPED Ministry of Finance, Planning and Economic Development
NGOs Non-Government Organisations
PAYE Pay as You Earn
PMI Purchasing Manager’s Index
PSC Private Sector Credit
R.Franc Rwandan Franc
T-Bills Treasury Bills
T-Bonds Treasury Bonds
TzShs Tanzanian Shilling
UBOS Uganda Bureau of Statistics
UShs / Shs Ugandan Shilling
US$ / USD United States Dollar
VAT Value Added Tax
YTM Yield to Maturity

Summary1

Real Sector

  • Consumer prices continued to increase with annual headline inflation rising to 6.8% in June 2022, up from 6.3% registered in the previous month. Increased input prices and transport costs continued to spur up prices of items like cooking oil, laundry bar soap, maize flour, fuel among others.

  • The Composite Indicator of Economic Activity was recorded at 148.4 in May 2022, the highest it has been since the start of the financial year.

  • The headline Purchasing Managers’ Index was 50.9 in June 2022 compared to 51.5 recorded in May 2022. Although the index continues to signal a further improvement in business conditions within the private sector, price pressures remained with input prices increasing for electricity, fuel and water.

  • Sentiments about doing business in Uganda were more optimistic during the month as indicated by the Business Tendency Index which was recorded at 58.98 in June 2022. Optimism was expressed across all sectors of the economy.

Financial Sector

  • Bank of Uganda increased the Central Bank Rate (CBR) by 100 basis points to 7.5%, a measure taken to contain the rising inflation amidst an uncertain outlook.

  • The Ugandan Shilling depreciated by 3.1% against the US Dollar following increased demand for the US Dollar that outstripped supply. The Shilling traded at a period average of Shs 3,747.38/USD in June 2022 compared to a period average of Shs 3,633.07/USD in May 2022.

  • Yields on all Treasury Bill tenors edged upwards to 8.22%, 9.10% and 10.50% for the 91-, 182- and 364-day tenors respectively during the month of June 2022. This was partly on account of an increase in the CBR, rising inflation and an increase in Government borrowing requirements.

  • The stock of outstanding private sector credit grew by 2.2% from Shs 19,113.88 billion in April to Shs 19,526.15 billion in May 2022 partly on of a pick up in economic activity hence increased demand for credit.

External Sector

  • Uganda’s trade deficit widened from USD 229.6 million in April to USD 278.1 million in May 2022 mainly on account of an increase in the import bill that more than offset the increase in export receipts during the month.

  • Export receipts grew by 3.8% from USD 344.36 million in April to USD 357.37 million in May 2022 mainly due to increased earnings from commodities such as coffee, tobacco, cement among others.

  • Merchandise imports grew by 11% to USD 635.5 million in May from USD 573.98 million 2022, mainly driven by an increase in the volumes imported by the private sector during the month.

  • Uganda traded at a surplus with the East African Community, European Union and the Rest of Africa while she traded at deficits with the Middle East, Asia, Rest of Europe and other countries during May 2022.

Fiscal Sector

  • Preliminary data shows that government operations in June 2022 resulted into an overall deficit of Shs 1,247.38 billion, this was higher than the planned deficit of Shs 779.33 billion mainly on account of higher than planned expenditure during the month.

  • Domestic revenue collections amounted to Shs 2,682.92 billion, representing a 101.5% performance against the monthly target. All major tax heads (income taxes, consumption taxes & taxes on international trade and transactions) registered surpluses during the month.

  • Preliminary data shows that Government expenditure amounted to Shs 3,960.03 billion in June 2022, translating into a 113.7% performance rate against the planned Shs 3,481.6 billion for the month.

East African Community

  • Annual headline inflation remained on an upward trend across all member states of the EAC. Inflation increased to 7.9%, 16.1% and 4.4% in June 2022 from 7.1%, 14.8% and 4.0% for Kenya, Rwanda and Tanzania respectively.

  • The Rwandan and Burundi Francs, Kenyan and Tanzanian Shillings all depreciated against the US Dollar by 0.2%, 0.2%, 0.9% and 0.1% respectively during the month of June 2022.

  • Uganda traded at surplus worth USD 40.46 million with the rest of the EAC member states during the month of May 2022. On a country specific level, Uganda traded at deficits with Tanzania (USD 22.69 million), Kenya (USD 2.81 million) and Rwanda (USD 0.78 million) while she traded at surpluses with South Sudan and Burundi at USD 56.62 million and 10.10 million respectively.

Real Sector Developments

Inflation

Annual headline inflation in June 2022 increased to 6.8% from 6.3% registered in the previous month with all the 3 components (Core, Energy, fuel & Utilities and Food crops & related items inflation) increasing. Annual Core, EFU, Food & related items inflation increased to 5.5%, 14.2% and 14.5% in June 2022 from 5.1%, 12.0% and 13.6% in May 2022 respectively.

Supply shocks, increased cost of inputs and higher transport costs triggered increases in prices for items such as maize and cassava flour, refined cooking oil, sugar, laundry bar soap among others, which explain the increase in Core Inflation.

The rising pump prices for liquid fuels particularly petrol and diesel led to the increase in EFU inflation in the year ending June 2022. The sustained increase in fuel prices was on account of increase in international oil prices, occasioned by supply & demand imbalances and geo-political tensions in Europe.

The pick-up in Annual Food crop and related items inflation was mainly due to price increases for food items specifically matooke, fresh milk, green leafy vegetables as well as sweet potatoes during the month. The increase in food prices was partly on account of increased transport costs and the prolonged drought that has affected harvests.

Economic Activity

The CIEA was recorded at 148.4 in May 2022, an increase of 0.5% from 147.7 in April 2022 signaling improvement in economic activity. This performance was partly due to a lag in the pick-up in economic activity in the services sector particularly education, tourism and hotel services.

The headline PMI in June 2022 was 50.9 signaling further improvement in business conditions in the private sector. Nonetheless, the reading was down from 51.5 in May 2022 as price pressures remained with input prices increasing for electricity, fuel and water.

Firms continued to record increases in output and new orders in June following increase in demand. During the month, employment decreased ending the 5 months sequence of job creation while suppliers continued to speed up deliveries with lead times shortening.

Business Perceptions 2

Sentiments about doing business in Uganda remained optimistic during the month as shown by the Business Tendency Index. The BTI was recorded at 58.98 in June 2022 from 56.23 the month before as shown in the figure below. All indicators measured by this index except average selling price show positive expectations about economic activity across all sectors of the economy (i.e., construction, manufacturing, wholesale trade, agriculture and other services).

Financial Sector Developments

Exchange Rate Movements

Higher commodity prices on the global market coupled with strengthening of the dollar against other major currencies resulted into a depreciation of 3.1% of the Ugandan Shilling against the US Dollar during the month. The Ugandan shilling traded at a period average of Shs 3,633.07/USD in May to a period average of Shs 3,747.38/USD in June 2022.

Similarly, the Uganda shilling depreciated against the Euro and Pound Sterling in June 2022, by 2.9% and 1.9% respectively when compared to the previous month.

Interest Rate Movements

In June 2022, Bank of Uganda increased the Central Bank Rate (CBR) by 100 basis points to 7.5%, a measure taken to contain the rising inflation amidst an uncertain outlook. The inflation outlook is uncertain with the main risks being rising global inflation, geo-political tensions in Europe, monetary policy tightening in advanced economies and higher global commodity prices.

Lending Rates3

Commercial banks’ shilling denominated lending rates remained relatively stable, marginally reducing to a weighted average of 18.32% in May 2022 from 18.84% in April 2022. Similarly, foreign currency denominated lending rates slightly decreased to a weighted average of 5.90% from 6.11% in April 2022.

Government Securities

During the month under review, Government raised Shs. 2,618.45 billion from the sale of Government paper. Shs. 255.25 billion from T-Bills, whereas Shs. 2363.20 billion was from T-Bonds. Securities worth Shs 1,471.46 billion matured and were refinanced while Shs 1,146.99 billion went towards financing other items in the Government budget.

Breakdown of Government Securities (UShs Billion) [Source: MOFPED]
Total Issuances Financing other items in the Government budget Refinancing
Q1 2021/22 3,318.2 1,594 1,724.2
Q2 2021/22 2,781.3 745.9 2,035.3
Q3 2021/22 3,114.2 1,182.8 1,931.4
Q4 2021/22 4,034.1 1,705.4 2,328.7
April 2022 751 326.1 424.9
May 2022 664.7 232.4 432.3
June 2022 2,618.4 1,147 1,471.5
FY 2021/22 to date 13,247.8 5,228.1 8,019.7

As shown in the table above, for FY2020/21, the net domestic borrowing for financing other items in the Government budget amounted to Shs 5,228.06 billion.

Annualised Yields (Interest Rates) on Treasury Bills

Yields on all Treasury Bill tenors edged upwards during the month. A combination of an increase in the Central Bank Rate (CBR), rising inflation and an increase in Government borrowing requirements at the end of the financial year contributed to higher yields on Treasury Bill instruments during June 2022. The annualised yields for June 2022 were 8.22%, 9.10%, 10.50% for the 91-, 182- and 364-day tenors respectively. This compares with 6.71%, 8.15% and 9.00% the previous month.

All auctions for Treasury Bills were oversubscribed, with the average bid to cover ratio being recorded at 1.92 in June 2022.

Yields on Treasury Bonds4 5

During the month, Government used T-Bonds to raise money Shs 2,363.20 billion in one calendar auction, one non-calendar auction and a private placement.

In the calendar auction, Government two bonds were reopened (of 5 and 20-year tenors). Similar to the Treasury Bills, there was a rise in the yields for bonds attributed to an increase in the CBR, rising inflation and increased issuances by Government. The Yield to Maturity (YTM) on the 5-year tenor rose to 14.50% in June as compared to 14.00% for a similar instrument in March 2022. Over the same period the rate on the 20-year tenor increased to 17.01% from 15.95%.

Outstanding Private Sector Credit6

The stock of outstanding private sector credit grew from Shs 19.11 billion in April to Shs 19.53 billion in May 2022. Of this, Shs 12.84 billion was shilling denominated credit while Shs 6.68 billion was foreign currency denominated credit. The stock grew by 2.2% compared to the 0.2% growth registered the previous month. (Figure 11)

Credit Extensions7

The value of credit approved in May 2022 amounted to Shs 1,043.5 billion, representing an approval rate of 46.8% against Shs 2,227.7 billion applied for during the month. This is lower than the 60.3% approval rate recorded in April 2022.

Personal and household loans continued to take the largest share of the credit approved in May 2022, at 24.6% (Shs 255.7 billion) . Other notable recipients were Trade at Shs 200.1 billion (19.2%), Agriculture at Shs 179.5 billion (17.3%), Building; mortgage; construction and real-estate at Shs 162.5 billion (15.6%) among others.

Despite personal & household loans and trade having the biggest share in May 2022, the share reduced when compared to April 2022 while the share of agriculture increased from 11.7% to 17.3% over the same period. (See Figure 13)

External Sector Developments

Merchandise Trade Balance8

In May 2022, Uganda’s merchandise trade with the rest of the world resulted into a deficit worth USD 278.1 million. This was higher than the USD 229.6 million deficit recorded in April 2022, mainly on account of a higher increase in the import bill that more than offset the marginal increase in export receipts.

On the other hand, year on year comparison shows that the trade deficit narrowed by 7% from USD 298.7 million in May 2021 to USD 278.1 million in May 2022. This was on account of a decline in the import bill, which more than offset the slight decline in export receipts. (See Figure 15)

Merchandise Exports9

Export receipts grew by 3.8% from USD 344.36 million in April 2022 to USD 357.37 million in May 2022 (figure 15). This was on account of increased receipts from coffee, fish, sim-sim, tobacco and cement among others, whose export volumes increased during the month.

Merchandise Exports by Product (US$ Million) [Source: BOU and MOFPED Calc.]
Product May-2021 Apr-2022 May-2022 May-2022 vs
May-2021
% Change 		May-2022 vs
Apr-2022
% Change
Total Exports 481.15 344.36 357.37 -25.73 3.78
Coffee
Value Exported 47.16 70.85 73.01 54.83 3.06
Volume Exported (Millions of 60 Kg Bags) 0.49 0.41 0.46 -7.87 11.63
Average Unit Value (US$ per Kg of Coffee) 1.59 2.9 2.67 68.06 -7.67
Non-Coffee Formal Exports 383.98 225.89 236.76 -38.34 4.81
of which:
Cotton 0.84 5 3.01 256.55 -39.79
Fish & Its Prod. (Excl. Regional) 9.42 10.72 12.54 33.14 17
Simsim 1.04 2.39 3.09 197.73 29.53
Beans 6.26 3.35 3.09 -50.75 -7.79
Flowers 5.65 4.84 6.4 13.32 32.29
Tobacco 6.77 2.78 4.06 -39.99 46.05
Cement 8.58 6.92 7.62 -11.25 10.02
Plastic Products 3.05 5.85 6.79 122.4 16.09
Base Metals & Products 12.72 16.41 16.37 28.71 -0.23
Sugar 13.16 19.05 18.95 44.03 -0.53
Edible Fats and Oils 2.42 1.47 1.61 -33.33 10.11
ICBT Exports 50.01 47.63 47.59 -4.83 -0.07

Coffee export volumes increased from 407,762 - 60 kg bags in April 2022 to 455,166 - 60 kg bags in May 2022. This was mainly on account of an increase in Arabica coffee exports which more than offset the decrease in Robusta coffee exports during the month. The decrease in Robusta coffee exports is attributed to lower yields occasioned by drought in some regions.

Destination of Exports10

The East African Community remained Uganda’s major destination of exports, growing by 9% from USD 139.9 million in April 2022 to USD 152.1 million in May 2022 hence accounting for 42.6% of the total exports during the month. This was followed by the Rest of Africa at USD 86.6 million and the European Union at USD 67.2 million or 24.2% and 18.8% of the total exports respectively respectively. (See Figure 17)

Merchandise Imports11

Merchandise worth USD 635.5 million was imported into the country during May 2022. This was an 11% increase compared to April 2022 mainly driven by an increase in volumes imported by the private sector during the month. The value of formal private sector imports grew from USD 556.72 million in April to USD 607.32 million in May 2022 following significant price increases for mainly oil imports during the month. Categories that recorded the largest increases include mineral products, chemical, plastic, rubber and related products, textile and textile products among others.

Asia remained the main source of Uganda’s imports with its share increasing from 35.3% a year ago to 46.5% in May 2022. The Middle East and East African Community came in second and third with 19.1% and 17.6% respectively.

On a country specific level, Uganda mainly got her imports from China, followed by India and the United Arab Emirates which accounted for 15.3%, 13.6% and 13.1% of the total imports respectively, during the month.

Trade Balance by Region12

During the month of May 2022, Uganda traded at a surplus with the East African Community, European Union and the Rest of Africa while trading at deficits with the Middle East, Asia, Rest of Europe and other countries.

Merchandise Trade Balance by Region (US$ Million) [Source: BOU]
Region May 2021 Apr 2022 May 2022
European Union -13.07 27.56 26.03
Rest of Europe -11.1 0.78 -0.55
Middle East 102.6 -134.7 -112.14
Asia -259.45 -230.94 -267.05
EAC -96.83 55.73 40.46
Rest of Africa 7.03 60.51 55.03
Other Countries -27.91 -8.57 -19.89

As was the case in April 2022, Uganda’s largest trade deficit in May 2022 was with Asia (USD 267.05 million) owing to increased imports from the region.

Fiscal Developments13

Preliminary data (See Table 4) shows that Government operations during the month of June 2022 resulted into an overall fiscal deficit of Shs 1,247.38 billion, which was higher than the initially planned deficit of Shs 779.33 billion. This was largely on account of higher than planned expenditure during the month.

Revenues

Revenues and grants in June 2022 amounted to Shs 2,712.64 billion, translating into a 100.4% performance rate against the planned Shs 2,702.27 billion for the month. This was due to the higher than anticipated collections for domestic revenues.

Domestic revenue collections in June 2022 amounted to Shs 2,682.92 billion against the planned Shs 2,643.28 billion, thus representing a 101.5% performance rate for the month. Of this, Shs 2,527.94 billion was tax revenue while Shs 154.98 billion was non-tax revenue collections. A surplus worth Shs 98.47 billion was recorded for tax revenues as collections under all major tax heads where higher than anticipated during June 2022. This performance was on account of;

  • Surplus collections for income taxes specifically PAYE and corporate tax as majority of the firms filed their tax returns to close the financial year 2021/22.

  • Improved enforcement of the digital tracking system and Electronic Fiscal Receipting and Invoicing System (EFRIS) that has led to efficient collection of consumption taxes during the month.

  • Surplus collections for VAT (tax on international trade and transactions)due to increased imports during the month.

Summary Table of Fiscal Operations June 2022 (UShs Billion) [Source: MOFPED]
Shs Billion Program Outturn Performance Deviation
Revenues and grants 2,702.27 2,712.64 100.4% 10.37
      Revenues 2,643.28 2,682.92 101.5% 39.63
            Tax 2,429.47 2,527.94 104.1% 98.47
            Non-tax 213.81 154.98 72.5% -58.84
      Grants 58.99 29.73 50.4% -29.26
                  o/w Project support 58.99 29.73 50.4% -29.26
Expenditures and lending 3,481.6 3,960.03 113.7% 478.42
      Current expenditures 2,046.38 2,396.03 117.1% 349.64
            Wages and salaries 477.95 438.62 91.8% -39.33
            Interest payments 489.97 479.61 97.9% -10.36
                  o/w domestic 300.12 340.2 113.4% 40.08
                  o/w external 189.85 139.41 73.4% -50.44
            Other recurrent expenditure 1,078.46 1,477.79 137.0% 399.33
      Development expenditures 1,365.03 1,536.93 112.6% 171.9
            Domestic 609.69 1,408.64 231.0% 798.95
            External 755.34 128.29 17.0% -627.05
      Net lending/repayments 29.58 5.67 19.2% -23.91
                  o/w HPP GoU 0 5.67 __ 5.67
      HPP Exim 29.58 0 0.0% -29.58
      Domestic arrears repayment 40.61 21.4 52.7% -19.21
Domestic fiscal balance -779.33 -1,247.38 __ __

Expenditure

Preliminary data shows that Government expenditure amounted to Shs 3,960.03 billion in June 2022, translating into a 113.7% performance rate against the planned Shs 3,481.6 billion for the month. This was mainly on account of higher than planned expenditure due to supplementary expenditure for both non-wage recurrent and domestic development under various sectors.

This overspend went to partly clearing of certificates of completion of works in the transport & works and education sectors to avoid accumulation of arrears.

East Africa Community Developments

EAC Inflation14

Annual Headline Inflation rates across the EAC all remained on an upward trend in June 2022. Kenya’s annual headline inflation increased from 7.1% in May to 7.9% in June mainly driven by an increase in the prices for food and non-alcoholic beverages. Annual headline inflation in Tanzania accelerated to 4.4% in June, up from 4.1% in May 2022 largely on account of a sharp increase in the costs for food, non-alcoholic beverages, housing and utilities during the month.

Similarly, Rwanda’s annual headline inflation increased to 16.1% in June 2022 from 14.8% the previous month. This is the highest the rate recorded since March 2009, mainly driven by soaring prices for food and non-alcoholic beverages, housing and transport.

EAC Exchange Rates

During the month of June 2022, all local currencies within the EAC depreciated against the US Dollar with the Burundi and Rwandan Francs depreciating by 0.2% respectively. While the Ugandan, Kenyan and Tanzanian shillings all depreciated by 3.1%, 0.9% and 0.1% respectively during the month.

Trade Balance with EAC

Uganda traded at a surplus worth USD 40.46 million with the rest of the EAC member states during the month of May 2022. On a country specific level, Uganda traded at deficits with Tanzania (USD 22.69 million), Kenya (USD 2.81 million) and Rwanda (USD 0.78 million) while she traded at surpluses with South Sudan and Burundi at USD 56.62 million and 10.10 million respectively.

Kenya was Uganda’s largest source of imports and destination of exports (USD 70.56 and 67.76 million respectively). Compared to April 2022, Uganda’s exports to the EAC grew by 9% from USD 139.9 million to USD 152.1 million in May 2022 while imports grew by 33% from USD 84.2 million to USD 111.7 million over the same period.

Glossary

Term Description
Bid to cover ratio This is an indicator for the demand of Government securities in a given auction. A ratio equal to 1 means that the demand for a particular security is equal to the amount offered by the government. A ratio less than 1 means the auction is under subscribed and a ratio greater than 1 means that the auction is over subscribed.
BTI The Business Tendency Index measures the level of optimism that executives have about current and expected outlook for production, order levels, employment, prices and access to credit. The Index covers the major sectors of the economy, namely construction, manufacturing, wholesale trade, agriculture and other services. The Overall Business Tendency Index above 50 indicates an improving outlook and below 50 a deteriorating outlook.
CIEA CIEA is constructed using seven variables, that is; private consumption estimated by VAT, private investment estimated by gross extension of private sector credit, government consumption estimated by its current expenditure, government investment estimated by its development expenditure, excise duty, exports and imports. Data comes with a lag of one month.
Core Inflation This is a subcomponent of headline inflation that excludes items subject to volatility in prices. It excludes energy, fuels, utilities, food crops and related items.
Headline Inflation This refers to the rate at which prices of general goods and services in an economy change over a period of time usually a year.
Non-Performing Loan This is a sum of borrowed money upon which the debtor has not made scheduled payments for a period usually at least 90 days.
Tenor This refers to the time-to-maturity of a financial instrument, for example, if a certain instrument matures after 91 days – it is called a 91-day tenor.
PMI The PMI is a composite index, calculated as a weighted average of five individual sub-components; New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%), and Stocks of Purchases (10%). It gives an indication of business operating conditions in the Ugandan economy. The PMI above 50.0 signals an improvement in business conditions, while readings below 50.0 show a deterioration. The PMI is compiled on a monthly basis by Stanbic Bank Uganda.
Yield to Maturity (YTM) Yield to maturity (YTM) is the total return anticipated on a treasury instrument if the instrument is held until it matures.

Online Resources

Visit us online at mepd.finance.go.ug.

The entire history of data used for this and previous Performance of the Economy Reports - subject to data revisions - can be downloaded at mepd.finance.go.ug/apps/macro-data-portal.

An interactive display of leading economic indicators and a GDP nowcast is available at mepd.finance.go.ug/apps/macro-monitor.

  1. Data on Private Sector Credit, CIEA and External sector has a lag of one month.↩︎

  2. The Key indicators in the BTI are Present business situation, business situation in 3 months, order volumes with suppliers, number of employees, competition, average selling price, financial situation and access to credit↩︎

  3. Data comes with a month lag.↩︎

  4. A private placement is a sale of Government securities to pre-selected investors and institutions rather than on the open market (auction).↩︎

  5. Reopening a bond instrument refers to issuing additional amounts using previously issued bond instrument. The reopened instrument has the same maturity date and coupon interest rate, as the original instrument, but with a different issue date and usually a different purchase price↩︎

  6. Data on private sector credit has a lag of one month.↩︎

  7. Data on private sector credit has a lag of one month.↩︎

  8. Statistics on trade come with a lag of one month.↩︎

  9. Other Countries include: Australia and Iceland.↩︎

  10. Others include: Australia and Iceland.↩︎

  11. Statistics on trade come with a lag of one month.↩︎

  12. Other Countries included Americas & others↩︎

  13. Fiscal data is preliminary.↩︎

  14. Data for Burundi and South Sudan not readily available.↩︎