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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
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 the level of economic activity as well as sentiments about economic and business conditions in the country over the last few months as shown by the high frequency indicators.

  • The Composite Index of Economic Activity (CIEA) grew by 1.1 percent from 154.62 in April 2023 to 156.36 in May 2023 compared to a contraction of 0.7 percent recorded in April 2023.

  • Similarly, the Purchasing Managers’ Index (PMI) was recorded at 56.4 in June 2023 from 57.4 in May 2023 indicating an improvement in business conditions given that it was above the 50.0-mark threshold. This was mainly driven by the growth of output and new orders supported by improved customer demand.

  • There was further improvement in positive sentiments about doing business in the Ugandan economy by businessmen and investors as illustrated by the Business Tendency Index recorded at 61.98 in June 2023 from 58.39 in May 2023. This continued optimism was shown by the index shooting to 60’s which was different from the usual.

  • Inflation continued to ease during the month of June 2023 declining to 4.9 percent from 6.2 percent recorded in May 2023. A reduction in Transport and fuel prices as well as a reduction in prices for food items such as maize flour, cassava flour, sweet potatoes and tomatoes contributed to this slow down.

Financial Sector

  • The Uganda Shilling gained strength against the United States dollar during the month of June 2023 with an appreciation of 0.6 percent. The shilling traded at an average midrate of Ushs. 3707.79/US dollar compared to an average midrate of Ushs. 3729.55/US dollar due to increased disbursement of budget support loans, increase in revenue from exports and forex inflow in the month.

  • The Yield to Maturity for the 15-year tenor reduced to 16.0% in June 2023 from 17.0% in March 2023 whereas the Yield to Maturity on the 3-year tenor remained unchanged at 14.0% as previously issued. The annualized yields for the 182 and 364-day tenors increased to 11.7% and 12.3% compared to 10.5% and 11.9% registered the previous month.

  • The weighted average lending rate for both the Shilling-denominated credit and the foreign currency-denominated credit increased to 20.14 percent and 8.5 percent in May 2023 from 19.27 percent and 8.11 percent in April 2023 respectively. This was mainly on account of the tight monetary policy stance being implemented by the central bank.

  • The stock of outstanding Private Sector credit continued to increase by 0.32 percent from Ushs. 20,464.6 billion in April 2023 to Ushs. 20,529.7 billion in May 2023.

External Sector

  • Uganda’s merchandise trade deficit with the rest of the world narrowed by 3.8 percent from USD 293.19 million in May 2022 to USD 282.08 million in May 2023 mainly on account of increased exports. Similarly on a monthly basis, the trade deficit was 28.6% higher than the USD 219.37 million recorded for April 2023 compared to the USD 282.08 million recorded for May 2023 as the growth of the import bill outmatched the growth realized in export receipts.

  • Export earnings in May 2023 increased by 8.7 percent to USD 585.81 million up from USD 538.87 million registered the previous month, mainly due to higher receipts for coffee.

  • Uganda’s import bill increased by 14.5 percent to USD 867.89 million in May 2023 from USD 758.25 million in April 2023. This was mainly attributed to the increased import volumes for the non-oil private sector imports

Fiscal Sector

  • Government operations during the month of June 2023 resulted in an overall fiscal deficit of Ushs. 178.12 billion which was lower than the projected deficit of Ushs. 575.26 billion owing to higher than planned expenditure for the month.

  • Domestic revenue collections during the month of June 2023 amounted to Ushs. 3,725.72 billion of which Ushs. 3,645.23 billion and Ushs.80.49 billion were tax revenue and non-tax revenue respectively.This performance was partly attributed to higher than planned domestic revenue collections where tax revenue registered a surplus of Ushs.722.58 billion.

  • Preliminary data shows that government spending in June 2023 amounted to Ushs.3,974.65 billion reflecting a 99.1 percent performance rate for the month. Current expenditure amounted to Ushs.2,719.26 billion against the target of Ushs. 2,405.52 billion while development expenditure amounted to Ushs. 1,194.92 billion against the planned of Ushs.1,499.05 billion.

East African Community

  • Similar to Uganda, Tanzania, Rwanda and Kenya’s annual headline inflation trended downwards in June 2023, reducing to 4.9%, 3.6%, 20.4% and 8.77% from 6.2%, 4.0%, 22.4%, and 8.78% respectively. This was mainly driven by the slowdown in prices of food as well as a reduction in fuel prices.

  • Except for the Ugandan shilling which appreciated by 0.6 percent, all currencies of the other EAC partner states recorded depreciations against the dollar. Burundi recorded the highest depreciation of 3.8 percent followed by Rwanda, Kenya, and Tanzania with depreciation rates of 2.2 percent, 1.8 percent and 0.3 percent respectively.

  • Uganda registered trade surpluses with all EAC partner states except for Tanzania and Burundi. The largest trade surplus was with D.R Congo (USD. 55.1 million), followed by South Sudan (USD. 51.0 million), Rwanda (USD. 17.6 million) and Kenya (USD. 3.6 million) respectively.

Real Sector Developments

Inflation

Annual headline inflation continued to ease from 6.2 percent in May 2023 to 4.9 percent in June 2023. This was mainly on account of a slowdown in price increments for food, petrol and diesel as well as a reduction in transport prices. Consequently, all the three subcomponents declined during the month as shown in figures 1 & 2 below.

Annual core inflation slowed down to 4.8 percent (within Bank of Uganda’s policy band) for the year ending June 2023 from 5.6 percent for the year ended May 2023. This was mainly on account of a continued slow down in the increases of prices for manufactured goods such as local gin, maize flour, rice, and cassava flour. In addition, a decline in transport prices to 2.6 percent in the year ending June 2023. This further contributed to a decline in core inflation.

Annual food and related items inflationalso slowed down to 12.3 percent in the year ending June 2023 compared to 15.7 percent registered in the year ended May 2023. This was attributed to a slowdown in the increases of prices for to beans. cooking bananas, sweet potatoes and tomatoes. This was attributed to favorable weather conditions which increased supplies across the country.

Annual Energy, Fuels and Utilities inflation likewise declined to negative 3.1 percent in the year ending June 2023 compared to 0.9 percent registered in the year ended May 2023. This was mainly due to a decline in the prices of Liquid Energy Fuels such as Petrol and diesel.

Economic Activity

Overall economic activity as well as Business conditions continued to strengthen during the month as shown by the high frequency indicators; Composite index of Economic Activity (CIEA), Purchasing Managers’ Index (PMI), Business Tendency Index (BTI) which all edged upwards signaling improvement in economic activity.

During the month the CIEA grew by 1.1 percent from 154.62 in April 2023 to 156.36 in May 2023 compared to a contraction of 0.7 percent recorded in April 2023. This was mainly due to strong growth in the agriculture sector as there was increased production of Irish potatoes, matooke, maize grain, sweet potatoes, tea, and cassava as a result of favorable weather conditions. The Purchasing Managers’ Index (PMI) also indicated an improvement in the economic activity. The PMI was recorded at 56.4 in June 2023 down from 57.4 in May 2023. Despite this decline, the index still reflects an improvement in economic activity as it was above 50.0-mark threshold. Surveyed firms were optimistic regarding outlook for the coming year due to further improvements in output and new business/ new orders and increase in employment.

Business Perceptions

Business perceptions continued to be optimistic as signaled by an increase in the Business Tendency Index recorded at 61.98 in June 2023 from 58.39 in May 2023. This mark was the highest compared to the previous months. Assessment of Key Indicators by Sector showed that optimism was reflected in all sectors except for wholesale trade. In addition, all key indicators measured by the index signaled optimism except for average selling price.

Financial Sector Developments

Exchange Rate Movements

The Uganda Shilling gained strength against the United States dollar during the month of June 2023 with an appreciation of 0.6 percent month-on-month to an average midrate of Ushs. 3,707.79 per US dollar from Ushs. 3,729.55 per US Dollar registered in May 2023. This appreciation was supported by the continued budget support inflows from development partners and an increase in export revenues from various commodity exports.

Interest Rate Movements

In June 2023, the Central Bank Rate was maintained at 10% to consolidate the gains made towards curbing inflationary pressures and to restore price stability while supporting economic growth. The decision was premised on core inflation adjusting and remaining stable around its medium target of 5 percent.

Lending Rates2

The weighted average lending rate for Shilling-denominated credit increased to 20.14 percent in May 2023 from 19.27 percent in April 2023. Likewise, the rate for foreign currency-denominated credit went up from 8.11 percent in April 2023 to 8.5 percent in May 2023. The elevated lending rates are reflective of the pass-through effects of the continued tight monetary policy stance.

Government Securities

During the month, Government carried out two Treasury Bills (T-Bill) auctions and one T-Bond auction. From these auctions, Government raised Ushs. 1,165.71 billion (at cost), of which Ushs. 519.19 billion was from T-Bills, and Ushs. 646.52 billion was from T-Bonds. Securities worth Ushs. 259.55 billion was used for the refinancing of maturing domestic debt, while Ushs. 906.17 billion went towards financing other items in the Government budget as shown in table 1.

Breakdown of Government Securities (UShs Billion) [Source: MOFPED]
Total Issuances Financing other items in the Government budget Refinancing
FY 2021/22 13,247.7 5,228.1 8,019.7
FY 2022/23 11,334.2 3,928 7,406.2
Q1 2022/23 2,344.2 417.1 1,927.1
Q2 2022/23 3,334.8 1,951.7 1,383.1
Q3 2022/23 3,232.4 1,075.9 2,156.5
Q4 2022/23 2,422.8 483.3 1,939.4
April 2023 670.6 -670 1,340.5
May 2023 586.5 247.1 339.4
June 2023 1,165.7 906.2 259.5

Annualised Yields (Interest Rates) on Treasury Bills

Yields (interest rates) on shorter term tenors increased for both the 182- and 364-day tenors but reduced for the 91-day tenor in June 2023. The annualized yields for the 182 and 364-day tenors increased to 11.7% and 12.3% compared to 10.5% and 11.9% registered the previous month. The yield on the 91-day tenor reduced to 9.8% from 10.4% for the previous month. The increase in yields for T-Bills (182 and 364-day tenors) is partly explained by higher-than-expected issuances following the increase in Net Domestic Financing (NDF), from Ushs. 2,928 billion in the revised budget for FY 2022/23 to Ushs. 3,928 billion. All auctions for T-Bills were oversubscribed, with an average bid to cover ratio of 5.57 in June 2023, the highest value recorded since the start of the Financial Year.

Yields on Treasury Bonds

During the month, Government issued two T-bond instruments (both reopened); 3-Year and 15-Year tenors. The Yield to Maturity for the 15-year tenor reduced to 16.0% in June from 17.0% in March 2023 whereas the Yield to Maturity on the 3- year tenor remained unchanged at 14.0% as previously issued.

Outstanding Private Sector Credit3

The stock of outstanding Private Sector credit continued to increase by 0.32 percent to Ushs. 20,529.7 billion in May 2023 from Ushs. 20,464.6 billion in April 2023. Of the total stock, Ushs. 14,162.55 billion was shilling denominated credit while shs.6,367.87 billion was forex denominated credit.

Credit Extensions4

The value of credit approved for disbursement in May 2023 amounted to Ushs.1557.1 billion, up from Ushs. 1119.9 billion the previous month. This represents an approval rate of 67.6% in comparison to 69.8% in April 2023. During the month, manufacturing, personal and household loans, trade and building, construction & real estate accounted for the largest share of credit extended to the private sector at 23.8% (Ushs. 371.1 billion), 20.6% (Ushs. 320.9 billion), 15.9% (Ushs. 247.5 billion), 15.2% (Ushs. 236.6 billion) respectively.

External Sector Developments

Merchandise Trade Balance5

Uganda’s merchandise trade deficit with the rest of the world narrowed by 3.8 percent from USD 293.19 million in May 2022 to USD 282.08 million in May 2023. This is partly due to increased merchandise exported specifically Gold. However, on a monthly basis, the deficit widened by 28.6% from USD 219.37 million in April 2023 to USD 282.08 million in May 2023 as shown in figure 15.

Merchandise Exports6

The value of merchandise exported increased from USD 351.23 million in May 2022 to USD 585.81 million in May 2023. Similarly, the value of merchandise exported in May 2023 increased by 8.7 percent to USD 585.81 million up from USD 538.87 million registered the previous month, mainly due to higher receipts for coffee. Export volumes of coffee increased by 21.3 percent to 453,169 (60kg bags) in May 2023 from 373,610 (60kg bags) the previous month. This increment in volume followed a reduction in supply of coffee from major countries such as Brazil and Vietnam on the international market. Other export items whose receipts increased during the month include sugar, beans, cement, tobacco, cotton and tea among others.

Merchandise Exports by Product (US$ Million) [Source: BOU and MOFPED Calc.]
Product May-2022 Apr-2023 May-2023 May-2023 vs
May-2022
% Change 		May-2023 vs
Apr-2023
% Change
Total Exports 351.23 538.87 585.81 66.79 8.71
Coffee
Value Exported 73.01 59.99 73.26 0.34 22.12
Volume Exported (Millions of 60 Kg Bags) 0.46 0.37 0.45 -0.44 21.29
Average Unit Value (US$ per Kg of Coffee) 2.67 2.68 2.69 0.78 0.68
Non-Coffee Formal Exports 236.76 428.56 464.92 96.36 8.48
of which:
Mineral Products 0 200.85 200.7 Inf -0.07
Cotton 3.01 1.65 2.33 -22.6 41.04
Tea 10.1 6.89 9.43 -6.62 36.74
Tobacco 4.06 4.87 4.9 20.61 0.75
Fish & Its Prod. (Excl. Regional) 12.54 10.19 9.77 -22.07 -4.07
Simsim 3.09 2.08 1.29 -58.18 -37.89
Maize 5.75 17.59 10.51 82.72 -40.25
Beans 3.09 1.77 2.4 -22.07 35.83
Flowers 6.4 5.01 6.62 3.52 32.33
Oil Re-Exports 8.75 10.09 12.19 39.32 20.88
Base Metals & Products 16.37 14.58 37.38 128.32 156.42
Sugar 18.95 10.19 15.94 -15.91 56.39
Cement 7.62 7.4 8.89 16.77 20.15
ICBT Exports 41.46 50.32 47.64 14.91 -5.34

Destination of Exports7

The East African Community (EAC) accounted for the largest share of Uganda’s exports (40.9 percent) during the month of May 2023. Kenya, Congo and South Sudan emerged as the top destinations for Uganda’s exports to EAC taking up to 38.1 percent, 24.9 percent and 22.2 percent respectively of the total share to the EAC. The EAC was followed by Middle East and Asia with 22.0 percent and 19.6 percent respectively of Uganda’s exports.

Merchandise Imports8

The value of merchandise imported increased from USD 644.42 million in May 2022 to USD 867.89 million in May 2023. Likewise, merchandise worth USD 867.89 million was imported in May 2023 an increase of 14.5 percent from the previous month. This was mainly attributed to the increased import volumes for the non-oil private sector imports. These include chemicals & related products, plastic, rubber & related products, base metals & their products, machinery Equipment, vehicles & Accessories and wood & wood products.

Origin of Imports

Asia remained the largest source of Uganda’s imports in May 2023, accounting for 36.8 percent of the total merchandise imported, with China and India accounting for 50.1 percent and 22.8 percent respectively of the total imports from Asia. This was followed by the EAC and the middle East which accounted for 28.4 percent and 14.7 percent respectively. In the EAC region, Tanzania (58.9 percent) and Kenya (35.7 percent) were the lead importers of Uganda’s merchandise.

Trade Balance by Region

Uganda traded at a deficit of USD 6.63 million with all regions expect for Middle East and the European Union.
Merchandise Trade Balance by Region (US$ Million) [Source: BOU]
Region May 2022 Apr 2023 May 2023
European Union 25.45 24.2 15.1
Rest of Europe -0.62 -5.29 -4.13
Middle East -113.85 21.33 1.64
Asia -271.21 -159.39 -204.48
EAC 93.31 -60.71 -6.63
Rest of Africa -5.98 -32.59 -70.31
Other Countries -20.29 -6.93 -13.2

Fiscal Developments9

Government operations during the month of June 2023 resulted in an overall fiscal deficit of Ushs. 178.12 billion which was lower than the anticipated deficit of Ushs. 575.26 billion owing to higher than planned expenditure for the month.

Summary Table of Fiscal Operations June 2023 (UShs Billion) [Source: MOFPED]
Shs Billion Program Outturn Performance Deviation
Revenues and grants 3,434.36 3,796.53 110.5% 362.17
      Revenues 3,235.9 3,725.72 115.1% 489.82
            Tax 2,922.65 3,645.23 124.7% 722.58
            Non-tax 313.25 80.49 25.7% -232.77
      Grants 198.46 70.81 35.7% -127.65
                  o/w Project support 198.46 70.81 35.7% -127.65
Expenditures and lending 4,009.62 3,974.65 99.1% -34.97
      Current expenditures 2,405.52 2,719.26 113.0% 313.73
            Wages and salaries 553.35 787.84 142.4% 234.49
            Interest payments 604.29 811.23 134.2% 206.94
                  o/w domestic 508.67 715.61 140.7% 206.94
                  o/w external 95.63 95.63 100.0% 0
            Other recurrent expenditure 1,247.88 1,120.19 89.8% -127.69
      Development expenditures 1,499.05 1,194.92 79.7% -304.13
            Domestic 968.41 820.6 84.7% -147.81
            External 530.64 374.32 70.5% -156.32
      Net lending/repayments 44.81 0 0.0% -44.81
                  o/w HPP GoU 0 0 __ 0
      HPP Exim 44.81 0 0.0% -44.81
      Domestic arrears repayment 60.23 60.47 100.4% 0.24
Domestic fiscal balance -575.26 -178.12 __ __

Domestic Revenues

Domestic Revenue collections during the month amounted to Ushs. 3,725.72 billion of which Ushs. 3645.23 billion and Ushs. 80.49 billion were tax revenue and non-tax revenue respectively registering an overall surplus of Ushs 489.82. This performance was partly attributed to higher than planned domestic revenue collections where tax revenue registered a surplus of Ushs 722.58 billion. However, non-tax revenue registered a shortfall of Ushs 127.65 which was below the target of Ushs. 198.46. The short fall in grants was mainly due to zero disbursements from the Global Fund.

Expenditure

Preliminary data shows that government spending in June 2023 amounted to Ushs. 3974.65 billion reflecting a 99.1 percent performance rate for the month. Current expenditure amounted to Ushs. 2719.26 billion against the target of Ushs. 2405.52 billion while Development expenditure amounted to Ushs. 1,194.92 billion against the planned of Ushs. 1,499.05 billion.

East Africa Community Developments

EAC Inflation10

Similar to Uganda, Tanzania, Rwanda and Kenya’s annual headline inflation trended downwards in June 2023, reducing to 4.9%, 3.6%, 20.4% and 8.77% from 6.2%, 4.0%, 22.4%, and 8.78% respectively. This was mainly driven by the slow down in prices of food as well as a reduction in fuel prices.

EAC Exchange Rates11

All currencies of the EAC partner states recorded depreciations against the dollar except for Uganda which appreciated with a 0.6 percent. Burundi recorded the highest depreciation of 3.8 percent followed by Rwanda, Kenya, and Tanzania with depreciation rates of 2.2 percent, 1.8 percent and 0.3 percent respectively.

Trade Balance with EAC12

Uganda registered trade surpluses with all EAC partner states except for Tanzania and Burundi as shown in figure 25 below. The largest trade surplus was with D.R Congo (USD. 55.1 million), followed by South Sudan (USD. 51.0 million), Rwanda (USD. 17.6 million) and Kenya (USD. 3.6 million) respectively.

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.

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

  2. Data comes with a month lag.↩︎

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

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

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

  6. Other Countries include: Australia and Iceland.↩︎

  7. Others include: Australia and Iceland.↩︎

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

  9. Fiscal data is preliminary.↩︎

  10. Data for Burundi and Democratic Republic of Congo not readily available.↩︎

  11. Recent data for Democratic Republic of Congo and South Sudan not readily available.↩︎

  12. Data on trade with the EAC has a one-month lag.↩︎