JANUARY 2023
Performance of the Economy Report
Ministry of Finance, Planning and Economic Development
2023-02-21
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 | |
| DRC | Democratic Republic of Congo | |
| EAC | East African Community | |
| EFU | Energy, Fuels and Utilities | |
| FOB | Free on Board | |
| FX | Foreign Exchange | |
| 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-Governmental Organisations | |
| PAYE | Pay as You Earn | |
| PMI | Purchasing Managers’ Index | |
| PSC | Private Sector Credit | |
| R.Franc | Rwandan Franc | |
| T-Bills | Treasury Bills | |
| T-Bonds | Treasury Bonds | |
| TShs | 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
There has been a general improvement in economic activity in recent months. This is shown by the recently released Q1 of FY 2022/23 GDP figures, as well as the various indicators of economic activity (CIEA, PMI and BTI).
Economic growth in Q1 of the FY 2022/23 was registered at 7.5%, high above the 2.7% recorded in the same quarter of the previous financial year. This was mainly driven by growth in both the industry and services sectors.
Business conditions in January 2023 improved as measured by the headline Purchasing Managers’ Index (PMI) which increased by 2.3% to 53.2 in January 2023 from 52.0 in December 2022. This was mainly driven by stronger consumer demand, also pointing towards an improvement in economic activity.
Sentiments about doing business remained positive but declined slightly as measured by the Business Tendency Index (BTI) which was recorded at 51.64 in January 2023 from 51.91 in December 2022. Key indicators measured by the index show that the business community was less optimistic about the competitiveness, the business conditions in the next 3 months and the increase in the new order volumes.
Meanwhile, the annual headline inflation rate increased marginally to 10.4% in January 2023 from 10.2% the previous month. This was mainly driven by a rise in transportation costs when compared to January 2022, as well as a rise in prices of some building materials (specifically cement, iron sheets, nails and paint) and some manufactured foods (specifically rice and sugar). On a month-on-month basis however, the general price index was reported to have declined by 0.2% between December 2022 and January 2023, hence signaling a likely reduction in annual headline inflation going forward.
Financial Sector
In January 2023, the Shilling marginally depreciated against the US Dollar by 0.1% to a monthly average of Shs 3,693.61/USD up from Shs 3,690.86/USD in December 2022. This was due to a pick-up in corporate demand for the dollar from the oil and gas sector.
As was the case in December 2022, yields continued to decline across all tenors in January 2023. This was partly due to reduced demand from Government following the decision to substitute a portion of domestic borrowing with external debt.
In December 2022, the weighted average commercial bank lending rates remained largely unchanged at 18.91%, compared to 18.98% recorded for the previous month. This is partly attributed to the high inflation rates which remain in the double digits despite the declining ratio of Non-Performing Loans (NPLs) to total gross loans from 5.79% in March 2022 to 5.21% in September, 2022.
The stock of total outstanding Private Sector Credit grew by 1.3% to Shs 20,154.6 billion in December 2022 from Shs. 19,886.4 billion in November 2022 partly due to the declining lending rates and Non-Performing Loans during the month.
External Sector
Uganda’s merchandise trade deficit narrowed by 1.6% to USD 294.9 million in December 2022 from USD 299.8 million the previous month. This was attributed to an increase in export receipts that more than offset the growth in the import bill.
Export receipts increased by 10.7% from USD 335.77 million in November 2022 to USD 371.81 million in December 2022. This growth was due to increased receipts for maize, mineral products among others, whose export volumes rose during the month.
Similarly, the value of merchandise imports increased by 4.9% to USD 666.71 million in December 2022 from USD 635.60 million in November 2022. This growth was mainly attributed to the higher volumes of private sector goods imported, particularly mineral products; textile and textile products; wood and wood products; chemical and related products, among others.
Fiscal Sector2
Government operations during the month of January 2023 resulted in an overall deficit of Shs 973.62 billion. This was lower than the planned deficit of Shs 1,326.61 billion on account of lower than planned expenditure.
Domestic revenue collections in January 2023 amounted to Shs 2,084.50 billion against the planned target of Shs 2,103.08 billion, indicating a shortfall of Shs 18.85 billion (99.1% performance rate).
Government expenditure and net lending for January 2023 amounted to Shs 3,324.08 billion, a 94.6% performance rate against the planned Shs 3,515.44 billion mainly on account of lower than planned spending under domestically financed development spending and spending on other non-wage recurrent items.
East African Community Within the EAC, annual headline inflation trended upwards for Uganda and Tanzania but decreased for Kenya and Rwanda. Tanzania’s annual headline inflation increased to 4.9% in January 2023 from 4.8% the previous month. On the other hand, headline inflation in Kenya and Rwanda declined to 9.0% and 31.1% in January 2023 from 9.1% and 31.7% respectively in December 2022.
-Local currencies of selected EAC Partner States all depreciated against the US Dollar in January 2023. The Kenyan Shilling, Rwandan and Burundian Francs registered depreciations of 0.7%, 1.1% and 0.3% respectively. However, the Tanzanian Shilling remained largely unchanged during the month, trading at TShs 2,309.1/USD in January 2023 compared to TShs 2,308.7/USD in December 2022.
- In December 2022, Uganda traded at a surplus worth USD 136.43 million with the rest of the EAC Partner States. The largest trade surpluses were recorded with South Sudan and Democratic Republic of Congo at USD 48.75 million and USD 48.53 million respectively.
Real Sector Developments
Inflation
Annual Headline inflation was on a declining trend from October to December 2022, supported majorly by a reduction in domestic fuel prices as well as a slowdown in the rate at which prices of manufactured foods were increasing.
In January 2023 however, annual headline inflation edged slightly upwards to 10.4% from 10.2% recorded the previous month. The increase in headline inflation was mainly driven by core inflation which increased to 9.0% from 8.4% in December 2022 as all other subcomponents of inflation declined.
On a month-on-month basis though, monthly headline inflation declined to -0.2% indicating a general decline in prices from the previous month. Core, EFU and food crops inflation all recorded declines at -0.1%, -0.4% and -0.5% respectively. This points to the fact that inflationary pressures are still contained and the rise in headline inflation might be a one-off. The declining trend in headline inflation might therefore resume going forward as the annual increase in domestic fuel and food prices continues to slow down.
Annual core inflation increased largely on account of a rise in transportation costs, as well as a rise in prices of some building materials and manufactured foods. Costs of passenger road transportation services in particular increased annually by 3.4% from January 2022. January 2022 is the month in which Government reinstated transportation of passengers at full vehicle capacity following the containment of the COVID-19 pandemic. This decision significantly reduced transportation costs at the time thereby creating a low base price index for comparison with January 2023. Consequently, the cost of road transportation services has risen compared to a year back. On a month-on-month basis however, costs of passenger road transportation services in January 2023 declined by 2.3% from December 2022 in line with the reduction in domestic fuel costs. As a result, core inflation also declined on a month on month basis. This points to the fact that indeed the annual increase in transportation services was a one-off and is likely to subside going forward.
Prices of manufactured foods like rice and sugar also increased during the month. Sugar prices have been on the rise following a reduction in sugarcane supplies from growers many of whom have exited the market on grounds that the price is too low and is no longer profitable. By January 2023, sugar prices went up by 50% compared to January 2022. Similarly, rice prices have increased due to a reduction in domestic production partly arising from the dry weather conditions (April – August 2022) in some of the major rice-producing regions in the country.
Annual EFU inflation continued on a downward trajectory recorded at 7.6% in January 2023 from 10.6% in December 2022. This is still attributed to a decline in domestic fuel prices particularly petrol and diesel since September 2022 in tandem with the sustained reduction in international crude oil prices. In spite of this declining trend in fuel prices, they remain high when compared to the same month the previous year. This has affected the input costs of some manufacturers hence the high final consumer prices.
Annual Food Crop and related items inflation declined to 27.6% from 29.4% in the previous month as food crop prices continued to increase albeit at a slower pace. Prices of food crops have remained high, largely on account of increased demand for food from Uganda’s neighbors whose food production has been affected by drought conditions. Additionally, the unfavorable weather conditions experienced across some parts of the country between April and August 2022 as well as the high fuel costs have further contributed to this hike in food crop inflation.
Economic Activity3
Economic activity has generally picked up in recent months. This is shown by the latest quarterly GDP growth numbers released by UBOS as well as the different indicators of economic activity (CIEA, PMI and BTI).
GDP growth for Q1 of the financial year (July 2022 –September 2022) was recorded at 7.5%, high above the 2.7% and -0.5% recorded in the same quarters of the previous two financial years (Q1 FY2021/22 and Q1 FY2020/21 respectively). This was mainly driven by growth in both the industry and services sectors. The growth in GDP is also reflected in the Composite Index of Economic Activity which increased annually by 5.2% in Q1 of this financial year compared to a 2.7% increase recorded in Q1 of the previous financial year.
From December 2021 and December 2022, the CIEA took an evidently upward trend increasing by 3.6% between the two periods. Compared to November 2022, the CIEA increased marginally from 150.30 in November 2022 to 150.42 in December 2022 signaling a slight improvement in the level of economic activity.
In January 2023, the Purchasing Managers’ Index increased by 2.3% to 53.2 from 52.0 in December 2022, signaling an improvement in business conditions during the month. Stronger consumer demand continued to drive this growth for the sixth consecutive month as new orders increased along with output.
Business Perceptions
Sentiments about doing business in Uganda remained positive with the Business Tendency Index remaining above the threshold of 50 but declining marginally from 51.91 in December 2022 to 51.64 in January 2023. Key indicators measured by the index show that the business community was less optimistic about the competitiveness, the business conditions in the next 3 months and the increase in the new order volumes.
An assessment of the BTI by sector revealed optimism about business conditions expressed in the construction and manufacturing sectors and pessimism expressed for the wholesale trade and agricultural sectors.
Financial Sector Developments
Exchange Rate Movements
During January 2023, there was a marginal depreciation of the Shilling against the US dollar by 0.1% to a monthly average rate of Shs 3,693.61/USD up from Shs 3,690.86/USD in December 2022. This performance was mainly on account of a pick-up in corporate demand for the dollar from the oil and gas sector.
The Shilling lost value against the Euro and Pound Sterling during the month, posting depreciation rates of 1.7% and 0.5% respectively compared to the previous month. See figure 6.
Interest Rate Movements
Bank of Uganda maintained its policy rate at 10.0% in January 2023, for the fourth consecutive month. This was in response to a reduction in inflationary pressures as reflected by a decline in monthly inflation from 0.1% in December 2022 to -0.2% in January 2023. It is worth noting that monthly inflation has been on a downward trend since October 2022 thereby contributing to the low inflation outlook. However, despite the recent decline in monthly inflation, the annual inflation rate remains in double digits.
Lending Rates4
In December 2022, the weighted average commercial bank lending rates remained largely unchanged at 18.91%, compared to 18.98% recorded for the previous month. This is partly attributed to the high inflation rates which remain in double digits despite the declining ratio of Non-Performing Loans (NPLs) to total gross loans from 5.79% in March 2022 to 5.21% in September, 2022. On the other hand, lending rates for foreign currency denominated credit decreased to 8.01% in December 2022, down from 8.13% the previous month.
Government Securities
There were three auctions of Government securities in January 2023; two for T-Bills and one for T-Bonds. A total of Shs 750.56 billion (at cost) was raised, of which Shs 379.04 billion was from Treasury Bills and Shs 371.52 billion was from Treasury Bonds. Of the amount raised, Shs 435.19 billion was issued for the refinancing of maturing domestic debt whereas Shs 315.37 billion went towards financing other items in the Government budget as shown in Table 1.
As at end January 2023, a total of Shs. 2,684.2 billion has been raised for financing other items in the Government budget (Net Domestic Financing), compared to a target of Shs 4,965.3 billion for the whole Financial Year (FY 2022/23).
| Total Issuances | Financing other items in the Government budget | Refinancing | |
|---|---|---|---|
| Q2 2022/23 | 3,134.8 | 1,951.7 | 1,183.1 |
| November 2022 | 878.6 | 530.8 | 347.7 |
| December 2022 | 1,694.6 | 1,212 | 482.6 |
| January 2023 | 750.6 | 315.4 | 435.2 |
| FY 2022/23 to date | 6,229.6 | 2,684.2 | 3,545.4 |
Annualised Yields (Interest Rates) on Treasury Bills
As was the case in December 2022, yields continued to decline across all tenors in January 2023. The annualized yields for January 2023 were 9.73%, 10.13% and 11.02% for the 91, 182 and 364-day tenors, respectively. This compares with 10.55%, 11.14% and 12.15%, the previous month. This was partly due to reduced demand from Government following the decision to substitute a portion of domestic borrowing with external debt.
During the month, all auctions for Treasury Bills were oversubscribed, with an average bid to cover ratio of 2.18.
Yields on Treasury Bonds^
Similar to short term securities, yields on long term securities declined during the month for two T-Bond instruments i.e. 2-year (first time issue) and 10-year (re-opened) tenors. The Yield to Maturity (YTM) on the 2-year tenor decreased to 13.50% in January 2023 from 16.25% in November 2022. The YTM for the 10-year tenor reduced to 15.39% during the month, from 17.50% in November 2022.
Outstanding Private Sector Credit5
The stock of total outstanding Private Sector Credit grew by 1.3% to Shs 20,154.6 billion in December 2022 from Shs. 19,886.4 billion in November 2022, with increases recorded for both Shilling and foreign currency denominated credit. (see figure 11). Shilling and foreign currency denominated credit rose to Shs 14,076.3 billion and Shs. 6,078.4 billion, respectively in December 2022 from Shs 13,947.7 billion and Shs. 5,938.7 billion, respectively in November 2022. This was in part due to the declining lending rates and NPLs all of which contributed to more credit extensions to the private sector.
Credit Extensions6
The value of credit approved for disbursement in December 2022 amounted to Shs 1,586.1 billion, an increase from Shs 1,139.8 billion the previous month. This represents an approval rate of 77.6% in comparison to 50.4% in November 2022, partly due to lower risk associated with lending reflected by the decline in NPLs and the pick-up in economic activity (reflected by improvements in the indicators of economic activity).
In December 2022, Building, Mortgage, Construction and Real Estate accounted for the largest share of credit approved at 32.1% (Shs. 508.5 billion), up from an approval rate of 11.7% the previous month. Other notable recipients of credit included Trade at Shs. 282.3 billion (17.8%), Personal and Household Loans at Shs. 271.8 billion (17.1%), Manufacturing at Shs 107.3 billion (6.8%), Mining and Quarrying at Shs. 179.8 billion (11.3%) and Business, Community, Social and other Services at Shs. 115.2 billion (7.3%). These six sectors constituted 92.4% of all the credit extended to the private sector during the month.
External Sector Developments
Merchandise Trade Balance7
Uganda’s merchandise trade deficit narrowed by 1.6% to USD 294.9 million in December 2022 from USD 299.8 million the previous month. This was attributed to an increase in export receipts that more than offset the growth in the import bill during the month.
On the other hand, compared to the same month the previous year, the merchandise trade deficit widened by 0.4% from USD 293.7 million to USD 294.9 million in December 2022, following a higher increase in the import bill which more than offset the growth in export earnings.
Merchandise Exports
Uganda exported merchandise worth USD 371.81 million in December 2022 indicating an increase of 10.7% from USD 335.77 million registered the previous month. This growth was attributed to increased receipts for maize and mineral products, among others.
Maize exports increased from USD 4.34 million in November 2022 to USD 20.48 million in December 2022. This rise was partly due to the onset of the maize harvesting season as well as the heightened demand for Uganda’s maize by the neighboring countries.
However, there was a 7.2% decline in the value of coffee export earnings from USD 64.14 million in November 2022 to USD 59.54 million in December 2022. This was mainly attributed to lower export volumes as a result of dry weather conditions from April to August 2022 in most parts of the country’s coffee-producing regions, which led to lower yields.
| Product | Dec-2021 | Nov-2022 | Dec-2022 |
Dec-2022 vs Dec-2021 % Change |
Dec-2022 vs Nov-2022 % Change |
|---|---|---|---|---|---|
| Total Exports | 322.96 | 335.77 | 371.81 | 15.13 | 10.73 |
| Coffee | |||||
| Value Exported | 75.25 | 64.14 | 59.54 | -20.88 | -7.17 |
| Volume Exported (Millions of 60 Kg Bags) | 0.54 | 0.45 | 0.42 | -21.99 | -6.34 |
| Average Unit Value (US$ per Kg of Coffee) | 2.34 | 2.39 | 2.37 | 1.42 | -0.89 |
| Non-Coffee Formal Exports | 204.5 | 230.04 | 270.67 | 32.36 | 17.66 |
| of which: | |||||
| Cotton | 3.05 | 0.99 | 1.06 | -65.36 | 6.84 |
| Tea | 8.04 | 8.95 | 8.84 | 9.95 | -1.23 |
| Tobacco | 4.02 | 5.33 | 4.89 | 21.52 | -8.28 |
| Simsim | 4.97 | 1.13 | 2.86 | -42.52 | 152.72 |
| Fish & Its Prod. (Excl. Regional) | 12.65 | 14.71 | 14.58 | 15.3 | -0.85 |
| Maize | 3.37 | 4.34 | 20.48 | 507.12 | 371.39 |
| Beans | 12.47 | 19.38 | 14.51 | 16.31 | -25.16 |
| Flowers | 4.72 | 4.09 | 4.1 | -13.05 | 0.32 |
| Mineral Products | 0 | 0.63 | 15.32 | Inf | 2,346.15 |
| Cement | 8.7 | 5.87 | 7.12 | -18.12 | 21.31 |
| Cocoa Beans | 9.13 | 5.1 | 5.01 | -45.08 | -1.72 |
| Base Metals & Products | 17.77 | 15.13 | 14.03 | -21.03 | -7.28 |
| Crude Oil (Excl Petroleum Products) | 9 | 10.45 | 8.36 | -7.08 | -19.99 |
| Plastic Products | 5.05 | 3.92 | 3.9 | -22.89 | -0.56 |
| Sugar | 5.45 | 10.39 | 9.62 | 76.47 | -7.43 |
| Fruits & Vegetables | 4.4 | 5.1 | 5.28 | 20 | 3.53 |
| Vanilla | 1.38 | 1.77 | 3.19 | 130.78 | 80.01 |
| ICBT Exports | 43.21 | 41.6 | 41.6 | -3.72 | 0.02 |
In comparison to December 2021, export earnings increased from USD 323.96 million to USD 371.81 million representing a 15.1% growth. This growth was on account of increased earnings from commodities such as maize, mineral products, beans among others.
Destination of Exports8
EAC remained the major destination for Uganda’s exports accounting for USD 227.08 million (61.1%) of the total exports during the month. In particular, Kenya (USD 71.19 million), D.R.C. (USD 57.01 million) and South Sudan (USD 50.98 million) received 78.9% of the total exports to the EAC.
European Union was the second major destination for our exports accounting for 15.3%, followed by Middle East at 6.9%. At country specific level, 45.8% of the exports to EU went to Italy and 17.5% to Germany. It is worth noting that in December 2022, Italy maintained the highest market share for Uganda’s coffee, followed by Sudan and Germany.
Merchandise Imports9
The value of merchandise imports increased by 4.9% to USD 666.71 million in December 2022 from USD 635.60 million in November 2022.
This growth was mainly attributed to the higher volumes of private sector goods imported. In particular, the private sector imports which had the largest increases were mineral products; textile and textile products; wood and wood products; and chemical and related products.
In comparison to the same month last year, imports grew by 8.1% from USD 616.71 million in December 2021 to USD 666.71 million in December 2022. This was mainly driven by increased import volumes for petroleum products, machinery equipment, vehicles & accessories over the period.
Origin of Imports
In December 2022, Asia remained the largest source of Uganda’s imports, accounting for USD 302.68 million of Uganda’s total imports, with China and India contributing 50.5% and 19.2% of the merchandise respectively.
The second largest source was Middle East (USD 143.38 million) followed by EAC (USD 90.65 million) and European union at USD 66.61 million.
Trade Balance by Region10
During the month of December 2022, Uganda traded at a deficit with all regions save for the EAC. The highest deficit was registered with Asia (USD 278.33 million), followed by the Middle East (USD 117.83 million) and the Rest of Africa at USD 11.16 million.
| Region | Dec 2021 | Nov 2022 | Dec 2022 |
|---|---|---|---|
| European Union | 1.27 | -19.71 | -9.75 |
| Rest of Europe | -12.86 | -8.83 | -11.23 |
| Middle East | -83.32 | -113.12 | -117.83 |
| Asia | -274.56 | -282.4 | -278.33 |
| EAC | 91.44 | 143.12 | 136.43 |
| Rest of Africa | -4.07 | -4.41 | -11.16 |
| Other Countries | -11.66 | -14.48 | -3.02 |
Fiscal Developments11
Government operations during the month of January 2023 resulted in an overall deficit of Shs 973.62 billion. This was lower than the planned deficit of Shs 1,326.61 billion on account of lower than planned expenditure. On the other hand, revenue and grants were higher than planned during the month.
| Shs Billion | Program | Outturn | Performance | Deviation |
|---|---|---|---|---|
| Revenues and grants | 2,188.83 | 2,350.45 | 107.4% | 161.63 |
| Revenues | 2,103.08 | 2,084.5 | 99.1% | -18.58 |
| Tax | 1,968.88 | 1,939.41 | 98.5% | -29.47 |
| Non-tax | 134.2 | 145.08 | 108.1% | 10.88 |
| Grants | 85.75 | 265.96 | 310.2% | 180.21 |
| o/w Project support | 85.75 | 265.96 | 310.2% | 180.21 |
| Expenditures and lending | 3,515.44 | 3,324.08 | 94.6% | -191.36 |
| Current expenditures | 2,191.97 | 2,164.9 | 98.8% | -27.06 |
| Wages and salaries | 537.63 | 584.41 | 108.7% | 46.79 |
| Interest payments | 482.9 | 600.7 | 124.4% | 117.8 |
| o/w domestic | 289.57 | 407.37 | 140.7% | 117.8 |
| o/w external | 193.33 | 193.33 | 100.0% | 0 |
| Other recurrent expenditure | 1,171.44 | 979.79 | 83.6% | -191.65 |
| Development expenditures | 1,298.89 | 1,147.43 | 88.3% | -151.45 |
| Domestic | 991.52 | 842.34 | 85.0% | -149.18 |
| External | 307.37 | 305.09 | 99.3% | -2.28 |
| Net lending/repayments | 0 | 0 | __ | 0 |
| o/w HPP GoU | 0 | 0 | __ | 0 |
| HPP Exim | 0 | 0 | __ | 0 |
| Domestic arrears repayment | 24.58 | 11.74 | 47.8% | -12.84 |
| Domestic fiscal balance | -1,326.61 | -973.62 | __ | __ |
Revenue and Grants
Revenue and grants during the month amounted to Shs 2,350.45 billion. This was Shs 161.63 billion above the planned 2,188.83 billion target for the month. This performance was on account of higher than planned grant receipts during the month.
Grants received during the month amounted to Shs 265.96 billion, the bulk of which was for the African Union Peacekeeping Mission in Somalia.
Domestic Revenues
Domestic revenue collections during the month of January 2023 amounted to Shs 2,084.50 billion against the planned target of Shs 2,103.08 billion hence a shortfall of Shs 18.85 billion (99.1% performance rate). Of the total collections, Shs 1,939.41 billion was tax revenue while Shs 145.08 billion was non-tax revenue collections.
Tax revenue collections for the month were largely on target, posting a 98.5% performance rate (Shs 29.47 billion shortfall) against the planned Shs 1,968.88 billion. This performance was mainly driven by the lower than planned collections for indirect (consumption) taxes and taxes on international trade; which more than offset the surplus collections registered under direct (income) taxes.
Direct domestic taxes for January 2023 amounted to Shs 653.60 billion, posting a Shs 44.51 billion surplus against the Shs 609.09 billion target for the month. This surplus was mainly on account of higher than planned collections for PAYE. PAYE collections in FY2022/23 continue to post surpluses driven by recruitment in the private sector particularly the oil and gas sector and salary increments for some civil servants.
On the other hand, indirect taxes continue to be affected partly by the decline in sales and production volumes for items such as soft drinks, beer, cement among others during the month. Indirect tax collections for January 2023 amounted to Shs 510.59 billion, against the planned target of Shs 572.28 billion as both excise duty and Value Added Tax collections registered shortfalls.
Taxes on international trade collections amounted to Shs 775.62 billion, a 99.9% performance against the Shs 775.78 billion planned target for the month. This performance was mainly driven by surplus collections registered under import duty, excise duty and VAT on imports collections during the month.
Non-tax revenue collections for the month amounted to Shs 145.08 billion, a Shs 10.88 billion surplus compared to the target for the month. This performance was attributed to continued streamlining of operations and improved coordination among the government agencies responsible for collecting NTR during the month.
Expenditure and net lending
Expenditure and net lending for January 2023 amounted to Shs 3,324.08 billion, a 94.6% performance rate against the planned Shs 3,515.44 billion for the month. This performance was mainly on account of lower than planned spending under domestically financed development spending and spending on other non-wage recurrent items.
Non-wage recurrent expenditure during the month amounted to Shs 979.79 billion, representing an 83.6% performance against the Shs 1,177.44 billion while domestic development expenditure for the month Shs 842.34 billion against the planned Shs 991.52 billion for the month.
Financing
On the financing side, government received budget support loans worth USD 242.11 million and USD 140.86 million from the International Monetary Fund and Standard Chartered Bank respectively during the month of January 2023.
East Africa Community Developments
EAC Inflation12
Within the EAC, annual headline inflation trended upwards for Uganda and Tanzania but decreased for Kenya and Rwanda. Tanzania’s annual headline inflation increased to 4.9% in January 2023 from 4.8% the previous month. This increase was largely driven by higher prices for food and non-alcoholic beverages; transport; and housing, water, electricity, gas and other fuels utilities.
On the other hand, annual headline inflation in Kenya and Rwanda declined to 9.0% and 31.1% in January 2023 from 9.1% and 31.7% in December 2022. This was mainly attributed to slower rises in the prices of food and non-alcoholic beverages.
EAC Exchange Rates
In January 2023, all national currencies of the selected EAC Partner states depreciated against the US Dollar. The Kenyan Shilling, Rwandan and Burundian Francs registered depreciations of 0.7%, 1.1% and 0.3% respectively. However, the Tanzanian Shilling remained largely unchanged during the month, trading at TShs 2,309.1/USD in January 2023 compared to TShs 2,308.7/USD in December 2022.
Trade Balance with EAC
Uganda traded at a surplus of USD 136.43 million with the rest of the EAC Partner States in December 2022. This was a decline from the USD 143.11 million surplus registered the previous month mainly due to an increase in imports from Tanzania and a reduction in exports to South Sudan. With the exception of Tanzania, Uganda registered surpluses with the rest of the EAC Partner States.
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. |
| 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.
Data on Private Sector Credit, CIEA and External sector has a lag of one month.↩︎
Fiscal data is preliminary.↩︎
Data on CIEA has a lag of one month.↩︎
Data comes with a month lag.↩︎
Data on private sector credit has a lag of one month.↩︎
Data on private sector credit has a lag of one month.↩︎
Statistics on trade come with a lag of one month.↩︎
Others include: Australia and Iceland.↩︎
Statistics on trade come with a lag of one month.↩︎
Other Countries included Americas & others↩︎
Fiscal data is preliminary.↩︎
Data for Burundi, DRC and South Sudan not readily available.↩︎