April 2024
Performance of the Economy Report
Ministry of Finance, Planning and Economic Development
2024-05-17
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 | |
| D.R.C | Democratic Republic of Congo | |
| EAC | East African Community | |
| EFU | Energy, Fuel 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 | |
| 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
Annual headline inflation reduced to 3.2% in April 2024 from 3.3% in March 2024. This was primarily attributed to a stronger deflation in food crop prices during April 2024 when compared the deflation recorded in March 2024. This implies that there was a bigger year on year decline in food crop prices in April 2024 when compared to the year on year decline in food crops prices recorded the previous month. On the contrary, Energy, Fuel and Utilities (EFU) and core inflation both increased.
Economic activity as well as prospects about business conditions continued to strengthen as shown by the high-frequency indicators of economic activity (CIEA, PMI and BTI) which all increased as explained below.
The Composite Index of Economic Activity (CIEA) rose to 162.38 in March 2024 from 162.19 the previous month, signalling an improvement in economic activity. This was mainly driven by an increase in output from the agriculture and industry sectors.
The Purchasing Manager’s Index (PMI) also increased to 52.6 in April 2024 from 49.3 in March 2024. This rise signaled an improvement in business conditions across the country supported by increased new orders, output and employment during the month.
Investors’ sentiments about doing business in the country remained optimistic hence maintaining a positive outlook on the economy. This was shown by the Business Tendency Index (BTI) which remained above the 50-mark threshold, increasing to 55.57 in April 2024 from 55.54 the previous month.
Financial Sector
In April 2024, the Ugandan Shilling appreciated by 1.9%, trading at an average mid-rate of Shs 3,822.7/USD compared to Shs 3,895.8/USD in March 2024. This appreciation as a result of significant inflows of foreign currency resulting from increased offshore investments in Government securities, higher export receipts (particularly coffee), Foreign Direct Investments, private remittances, and contributions from NGOs and non-financial institutions like Total Energies.
The Central Bank Rate (CBR) increased to 10.25% in April 2024 from 10.0% in March 2024. The increase in the CBR was aimed at further controlling inflationary pressures.
The weighted average lending rates for Shilling-denominated credit reduced to 17.34% in March 2024 from 18.09% in February 2024. This was partly due to more lending towards prime corporate borrowers, whom banks charge lower interest rates as they are deemed less risky.
Following the continued tightening of the monetary policy, yields (interest rates) on Treasury Bills generally edged upwards in April 2024. The annualized yields for the 364-day and 182-day tenors slightly increased to 13.4% and 12.6% from 13.3% and 12.4% recorded the previous month, respectively. The yields for the 91-day tenor however remained unchanged from the previous month at 9.8%.
In March 2024, the stock of total outstanding Private Sector Credit reduced to Shs. 21,735.9 billion from Shs. 21,741.9 billion in February 2024, on account of a decline in foreign currency denominated credit.
External Sector
Uganda’s merchandise exports increased by 0.2% from USD 633.0 million in February 2024 to USD 634.43 million in March 2024. This increase was mainly due to a rise in export receipts from tobacco, simsim, hides & skins and gold.
The merchandise imports also increased by 14.1% to USD 1,037.84 million in March 2024, from USD 909.54 million the previous month. This was mainly attributed to an increase in private sector imports particularly vegetable products, beverages, fats & oil; mineral products (excluding petroleum products); and plastics, rubber & related products.
As a result of the increase in the import bill surpassing the gains in export receipts, Uganda’s trade deficit with the rest of the world widened by 45.9% to USD 403.41 million in March 2024 from USD 276.54 million the previous month.
Fiscal Sector
In April 2024, total revenues and grants amounted to Shs 2,162.0 billion against the target of Shs 2,587.1 billion. Domestic revenue collections were Shs 2,127.39 billion against the target of Shs 2,379.73 billion, thus registering a shortfall of Shs 252.35 billion. This shortfall was mainly on account of lower than planned collections for both Non-Tax and Tax revenues during the month.
Total Government expenditure in April 2024, amounted to Shs 3,463.61 billion, a performance rate of 105.09% against the target of Shs 2,992.43 billion. The higher than planned expenditure was driven by an increase in recurrent expenditure which was above plan by 31.92% as wage, interest payments and non-wage spending were all above their respective targets during the month.
Consequently, due to the shortfall in revenue and grants and higher than planned expenditure, Government operations resulted in a fiscal deficit of Shs 1,301.61 billion in April 2024, which was higher than the target of Shs 405.32 billion for the month.
Except for Tanzania, there was a general slowdown in annual headline inflation across the EAC partner states for the year ending April 2024. Annual headline inflation in Rwanda and Kenya declined from 0.6% and 5.7% in March 2024 to -0.5% and 5.0%, respectively in April 2024. Conversely, the annual headline inflation rate in Tanzania for the year ending April 2024 increased slightly to 3.1% from 3.0% in March 2024.
The US dollar exchange rate trended differently in the different EAC Partner States in April 2024. The Ugandan and Kenyan Shillings appreciated by 1.9% and 4.0% respectively, while the Tanzanian Shilling, Rwandan and Burundian Francs depreciated by 1.0%, 0.5% and 0.2% respectively.
During March 2024, Uganda traded at a deficit with the EAC amounting to USD 193.75 million, an increase from the USD 35.34 million deficit recorded in February 2024. This was majorly on account of a substantial increase in imports from Tanzania, which grew by USD 169.39 million from the previous month.
1 Real Sector Developments
1.1 Inflation
Annual headline inflation reduced to 3.2% in April 2024 from 3.3% in March 2024. This was primarily attributed to a stronger deflation in food crop prices during April 2024 when compared the deflation recorded in March 2024. This implies that there was a bigger year on year decline in food crop prices in April 2024 when compared to the year on year price decline for food crops recorded the previous month. On the contrary, Energy, Fuel and Utilities (EFU) and core inflation both increased.
Annual food crops and related items inflation: Food crop prices recorded a deflation of -2.4% in April 2024 from a deflation of -0.4% in the previous month. This implies that similar to the previous month, there was a general decline in prices of food crops and related items in April 2024 when compared to the same period a year back albeit at a stronger pace. Food crops like matooke, beans, peas, cassava, carrots, pumpkin, tomatoes and bananas all recorded more significant price declines during the month. This was largely attributed to increased harvests as weather conditions remained favorable.
Core inflation increased to 3.5% in April 2024 from 3.4% the previous month. This was on account of an increase in the rate at which prices of some foods increased especially meats like; chicken, offals, liver, sausages, fresh tilapia, nile perch, and silver fish (mukene). Fresh tilapia, silver fish and chicken kroilers in particular recorded significant price increases of 15.6%, 28.8% and 7.7% in April compared to 5.8%, 6.9%, and 2.9% respectively in the previous month.
Annual Energy, Fuels and Utilities (EFU) Inflation increased to 7.9% in April 2024 from 7.6% the previous month. This was largely attributed to a rise in prices for petrol, diesel, liquified gas as well as charcoal and electricity when compared to the same period a year back. The rise in electricity charges followed a decision by the Electricity Regulatory Authority to increase end user tariffs for the second quarter of 2024 on account of the depreciation of the Shilling against the dollar which increases the costs of power generation incurred in foreign currency.
1.2 Economic Activity
Overall, economic activity strengthened and prospects about business conditions were optimistic. This is shown by the high-frequency indicators of economic activity (CIEA, PMI and BTI) which all edged upwards.
The Composite Index of Economic Activity edged further upwards to 162.38 in March 2024 from 162.19 the previous month, signalling an improvement in economic activity. The rise in the CIEA was majorly on account of increased activity in the agriculture and industry sectors.
The Purchasing Managers’ Index reversed its downward trend and rose above the threshold of 50 to 52.6 in April 2024 from 49.3 the previous month. This uptick signaled an improvement in business conditions driven by increased demand, which supported a rise in new orders and output. The PMI also revealed a likely increase in staff among firms pointing towards a likelihood that firms hired new staff during the month as the outlook for output going forward looked promising.
At the sectoral level, the construction, industry, services and wholesale & retail sectors all recorded increased activity.
1.2.1 Business Perceptions
Investors were more optimistic about the business environment especially in the manufacturing, and wholesale trade sectors. This is shown by the Business Tendency Index, which remained above the 50-mark threshold increasing to 55.57 in April 2024 from 55.54 the previous month.
Key indicators measured by the index show that the business community was most optimistic about employment prospects and business conditions in the next three months pointing to a positive outlook of the economy. For the first time since September 2023, the indicator for employee numbers rose above the threshold of 50 from 49.30 in March to 50.90 in April 2024, implying that investors were optimistic about hiring new staff going forward.
2 Financial Sector Developments
2.1 Exchange Rate Movements
The Ugandan Shilling traded at an average mid-rate of Shs 3,822.7/USD in April 2024 compared to Shs 3,895.8/USD in March 2024, registering an appreciation of 1.9%. This is a reversal from the depreciation pressures the Shilling has experienced since August 2023.
This appreciation of the Ugandan Shilling was driven by several factors. Key among them was the significant inflow of foreign currency, notably from increased offshore investments in Uganda’s Government securities. This influx was due to competitive yields owing to monetary policy actions of increasing the Central Bank Rate in March 2024. Additionally, the Shilling benefited from heightened dollar inflows from higher export receipts (particularly coffee), Foreign Direct Investments, private remittances, NGOs, and non-financial institutions like Total Energies which contributed to the currency’s strength against the dollar.
2.2 Interest Rate Movements
Bank of Uganda increased the Central Bank Rate (CBR) to 10.25 % in April 2024 from 10.0% in March 2024. The increase in the CBR was aimed at further controlling inflationary pressures.
2.2.1 Lending Rates4
The weighted average lending rates for Shilling-denominated credit reduced to 17.34% in March 2024 from 18.09% in February 2024. This was partly due to more lending towards prime corporate borrowers, whom banks charge lower interest rates as they are deemed less risky.
However, lending rates for foreign currency-denominated credit increased to 9.2% in March 2024 from 8.8% in February 2024, mainly on account of depreciation pressures on the exchange rates in the previous months.
2.3 Government Securities
In April 2024, the Government raised a total of Shs.1,163.64 billion from two Treasury Bill auctions and one treasury bond auction. Particularly, Shs.441.13 billion was from T-Bills while Shs.722.51 billion was from the T-Bond auction. Shs.491.53 billion went towards refinancing maturing treasury instruments, while the balance of Shs.672.11 billion was used for financing other items of the budget.
| Total Issuances | Financing other items in the Government budget | Refinancing | |
|---|---|---|---|
| FY 2022/23 | 11,334.2 | 3,928 | 7,406.2 |
| Q2 2023/24 | 3,681.5 | 1,558.2 | 2,123.2 |
| Q3 2023/24 | 4,048.9 | 1,495.4 | 2,553.5 |
| March 2024 | 982.6 | 376.7 | 605.9 |
| April 2024 | 1,163.6 | 672.1 | 491.5 |
| FY 2023/24 to date | 13,166.8 | 5,408.1 | 7,758.8 |
2.4 Annualised Yields (Interest Rates) on Treasury Bills
Following the continued tightening of the monetary policy by Bank of Uganda, yields (interest rates) on treasury instruments generally edged upwards in April 2024. The annualized yields for the 364-day and 182-day tenors slightly increased to 13.4% and 12.6% from 13.3% and 12.4% recorded the previous month, respectively. Yields remained unchanged from the previous month for the 91-day tenor at 9.8% in April.
All auctions for Treasury Bills were oversubscribed in April 2024, with the average bid to cover ratio amounting to 2.06. This implied high demand for Government securities during the month.
2.4.1 Yields on Treasury Bonds
Government issued two Treasury Bonds in April, one of 2-year tenor and the other of 10-year tenor. Yields slightly increased for both tenors compared to their previous issuance. Yields increased to 16.00% in April 2024 for the 10-year bond compared to 15.80% offered for the same tenor in the February 2024 private placement. For the 2-year bond, yields increased to 13.75% in April 2024 up from 13.20% in January 2024.
2.5 Outstanding Private Sector Credit5
In March 2024, the stock of total outstanding Private Sector Credit reduced to Shs. 21,735.9 billion from Shs 21,741.9 billion in February 2024. This was on account of a decline in foreign currency denominated credit by Shs. 66.25 billion from Shs. 6,603.5 billion in February to Shs. 6,537.3 billion recorded in March 2024.
However, the stock of Shilling denominated credit increased by 0.4% to Shs. 15,198.6 billion from Shs. 15,138.4 billion, partly due to the lower lending rates and increased credit extensions to prime borrowers during the month.
2.6 Credit Extensions6
The value of credit approved for disbursement increased by 10.6% to Shs 1,096.1 billion in March 2024 from Shs 991.2 billion in February 2024. This was mainly attributed to increased demand for credit by prime borrowers who are considered less risky. Commercial banks were therefore more willing to advance credit to these borrowers.
Of the total credit extended to the private sector in March 2024, personal and household loans accounted for the largest share at 32.9% followed by business, community, and social services (22.3%), trade (16.6%), and agriculture (10.0%), among other sectors.
3 External Sector Developments
3.1 Merchandise Trade Balance7
In March 2024, Uganda’s trade deficit with the rest of the world increased by 45.9% to USD 403.41 million from USD 276.54 million the previous month. Similarly, on a year-on year basis, the trade deficit with the rest of the world widened by 44.1%, rising from USD 279.90 million in March 2023 to USD 403.41 million in March 2024.
The increase in trade deficits, both monthly and annually was driven by a rise in the import bill, which surpassed the gains in export receipts.
3.2 Merchandise Exports
During March 2024, Uganda’s merchandise exports increased from USD 633.0 million in February to USD 634.43 million, representing a 0.2% growth rate. This increase was mainly due to a rise in export receipts from tobacco, simsim, hides & skins and gold.
However, receipts from coffee exports declined by 21.6% from USD 82.56 million in February 2024 to USD 64.74 million in March 2024, despite the increase in the average coffee export price during the period. This performance was mainly attributed to a smaller harvest in the Elgon region, coupled with delays in the onset of the harvest season and shortage of shipping containers.
Italy maintained the highest market share of Uganda’s coffee exports, accounting for 38.1% of the total coffee exports. It was followed by India, Germany, and Sudan accounting for 12.3%, 10.5%, and 5.0% of the total coffee exports, respectively.
| Product | Mar-2023 | Feb-2024 | Mar-2024 |
Mar-2024 vs Mar-2023 % Change |
Mar-2024 vs Feb-2024 % Change |
|---|---|---|---|---|---|
| Total Exports | 679.357 | 632.996 | 634.427 | -6.614 | 0.226 |
| Coffee | |||||
| Value Exported | 71.544 | 82.564 | 64.735 | -9.517 | -21.594 |
| Volume Exported (Millions of 60 Kg Bags) | 0.488 | 0.435 | 0.33 | -32.413 | -24.137 |
| Average Unit Value (US$ per Kg of Coffee) | 2.444 | 3.166 | 3.273 | 33.877 | 3.352 |
| Non-Coffee Formal Exports | 561.392 | 505.889 | 525.465 | -6.4 | 3.87 |
| of which: | |||||
| Mineral Products | 268.102 | 263.88 | 270.423 | 0.866 | 2.479 |
| Cotton | 5.343 | 5.882 | 3.544 | -33.656 | -39.745 |
| Tea | 6.637 | 4.263 | 4.281 | -35.492 | 0.424 |
| Tobacco | 10.83 | 2.889 | 10.341 | -4.517 | 257.906 |
| Fish & Its Prod. (Excl. Regional) | 11.623 | 10.317 | 9.822 | -15.492 | -4.798 |
| Simsim | 3.506 | 5.254 | 5.486 | 56.47 | 4.413 |
| Maize | 30.781 | 8.417 | 6.529 | -78.788 | -22.428 |
| Beans | 3.938 | 4.568 | 4.141 | 5.162 | -9.348 |
| Flowers | 5.65 | 5.673 | 4.98 | -11.861 | -12.229 |
| ICBT Exports | 46.421 | 44.543 | 44.226 | -4.728 | -0.71 |
On a year-on-year basis, Uganda’s merchandise exports saw a decline of 6.6%, from USD 679.36 million in March 2023 to USD 634.43 million in March 2024. This decline was primarily due to a decline in export receipts from maize, coffee, tea, among others.
3.3 Destination of Exports8
In March 2024, the Middle East was the largest destination of Uganda’s exports, accounting for 41.8% of the total exports. At country specific level, United Arab Emirates received 98.2% of the exports to the region, predominantly consisting of gold exports.
Other notable destinations for Uganda’s exports during the month were EAC, European Union and Asia accounting for 29.6%, 14.3% and 9.7% of the total exports, respectively. Within the EAC, the Democratic Republic of Congo emerged as the largest importer of Uganda’s merchandise, taking up 31.1% of the total exports. This was closely followed by Kenya at 26.8% and South Sudan at 25.1%.
3.4 Merchandise Imports9
During March 2024, Uganda’s merchandise imports increased by 14.1% to USD 1,037.84 million from USD 909.54 million in February 2024. This was mainly attributed to an increase in private sector imports particularly vegetable products, beverages, fats & oil; mineral products (excluding petroleum products); and plastics, rubber & related products.
Similarly, a year on year comparison shows that the import bill grew by 13.1% from USD 917.60 million in March 2023 to USD 1,037.84 million in March 2024. This growth was on account of increased import volumes for vegetable products, beverages, fats & oil; base metals & their products; machinery equipment, vehicles & accessories, among others.
3.5 Origin of Imports
The EAC emerged as the largest source of Uganda’s imports, constituting 36.8% of the total imports in March 2024. Within the EAC, Tanzania stood out as the biggest source, accounting for 80.2% of the imports from the region, with the main commodities being gold and rice.
Other notable sources of imports in March 2024 included Asia, the Middle East and Rest of Africa accounting for 30.5%, 11.7% and 11.2% of the total imports, respectively.
3.6 Trade Balance by Region
In March 2024, Uganda registered trade surpluses with the Middle East and European Union, amounting to USD 143.77 million and USD 14.89 million, respectively.
Conversely, trade deficits were recorded with Asia, EAC, Rest of Africa and the Rest of Europe of USD 255.02 million, USD 193.75 million, USD 98.61 million, and USD 1.38 million, respectively during the month.
| Region | Mar 2023 | Feb 2024 | Mar 2024 |
|---|---|---|---|
| Middle East | 114.7 | 34.46 | 143.77 |
| European Union | 10.62 | 20.14 | 14.89 |
| Rest of Europe | -4.31 | 0.05 | -1.38 |
| Rest of Africa | -68.57 | -110.3 | -98.61 |
| EAC | 92.25 | -35.34 | -193.75 |
| Asia | -356.49 | -172.04 | -255.02 |
| Other Countries | -26.44 | -13.53 | -13.33 |
4 Fiscal Developments10
In April 2024, Government operations resulted in a fiscal deficit of Shs 1,301.61 billion which was higher than the target of Shs 405.32 billion for the month. This was due to a shortfall in revenue and grants and higher than planned expenditure.
| Shs Billion | Program | Outturn | Performance | Deviation |
|---|---|---|---|---|
| Revenues and grants | 2,587.1 | 2,162 | 83.6% | -425.1 |
| Revenues | 2,379.73 | 2,127.39 | 89.4% | -252.35 |
| Tax | 2,198.04 | 1,994.07 | 90.7% | -203.97 |
| Non-tax | 181.7 | 133.32 | 73.4% | -48.38 |
| Grants | 207.37 | 34.61 | 16.7% | -172.76 |
| o/w Project support | 204.41 | 25.98 | 12.7% | -178.43 |
| Expenditures and lending | 2,992.43 | 3,463.61 | 115.7% | 471.19 |
| Current expenditures | 1,782.01 | 2,350.84 | 131.9% | 568.83 |
| Wages and salaries | 537.74 | 603.18 | 112.2% | 65.44 |
| Interest payments | 252.13 | 261.82 | 103.8% | 9.69 |
| o/w domestic | 220.89 | 213.22 | 96.5% | -7.67 |
| o/w external | 31.23 | 48.6 | 155.6% | 17.36 |
| Other recurrent expenditure | 992.15 | 1,485.85 | 149.8% | 493.7 |
| Development expenditures | 1,206.62 | 1,108.76 | 91.9% | -97.86 |
| Domestic | 746.62 | 789.93 | 105.8% | 43.31 |
| External | 460 | 318.83 | 69.3% | -141.17 |
| Net lending/repayments | 2.11 | 0 | 0.0% | -2.11 |
| o/w HPP GoU | 0 | 0 | __ | 0 |
| HPP Exim | 2.11 | 0 | 0.0% | -2.11 |
| Domestic arrears repayment | 1.67 | 4.01 | 239.7% | 2.34 |
| Domestic fiscal balance | -405.32 | -1,301.61 | __ | __ |
4.1 Domestic Revenues
Domestic revenue collections in April 2024, amounted to Shs 2,127.39 billion, performing at 89.4% against the target of Shs 2,379.73 billion thus registering a shortfall of Shs 252.35 billion. This was mainly on account of shortfalls registered in both Non-Tax and Tax revenue collections.
Tax revenue collections amounted to Shs 1,994.07 billion against the planned target of Shs 2,198.04 billion in April 2024, registering a shortfall of Shs 203.97 billion. This was mainly driven by taxes on international trade and Value Added Taxes (VAT) which performed at 86% and 82% respectively.
Taxes on international trade amounted to Shs 790.96 billion against the target of Shs 921.0 billion registering a shortfall of Shs 130.03 billion. This was mainly on account of the underperformances in VAT on imports and petroleum duty with shortfalls of Shs 61.82 billion and Shs 49.79 billion respectively.
Similarly, indirect domestic taxes amounted to Shs 565.01 billion against the target of Shs 677.82 billion registering a shortfall of Shs 112.81 billion mainly due to lower than planned collections in VAT and Excise duty. Value Added Tax collections amounted to Shs 378.21 billion registering a shortfall of Shs 80.64 billion against the target of Shs 458.85 billion. This was largely attributed to declines in production volumes of key vatable supplies such as sugar, cement, soft drinks among others.
Excise duty collections amounted to Shs 186.80 billion against the planned amount of Shs 218.96 billion registering a shortfall of Shs 32.17 billion, this was mainly due to lower than planned collections in beer and spirits.
Direct domestic taxes in April 2024 on the other hand, amounted to Shs 680.58 billion against Shs 643.36 billion registering a surplus of Shs 37.22 billion. This was mainly on account of the higher than planned collections in Pay As You Earn (PAYE) which amounted to Shs 433.49 billion against a target of Shs 382.90 billion, registering a surplus of Shs 50.59 billion. This performance was mainly due to increased recruitment and higher wages in the public service on account of increment in the salaries of the science cadre and the private sector especially in the manufacturing and banking sectors.
4.2 Expenditure
Total Government expenditure in April 2024, amounted to Shs 3,463.61 billion, a performance rate of 105.09% against the target of Shs 2,992.43 billion. The higher than planned expenditure was driven by an increase in recurrent expenditure which was above plan by 31.92% as wage, interest payments and non-wage spending were all above their respective targets during the month. This was largely attributed to the supplementary budgets allocated during the financial to cater for wage and non-wage shortfalls thus resulting in greater expenditures than initially anticipated at budget time when the monthly programs were set.
Expenditure under wages and salaries amounted to Shs 603.18 billion against the target of Shs 537.74 billion. Similarly, non-wage amounted to Shs.1485.85 billion against the target of Shs 992.15 billion. Interest payments also amounted to Shs 261.82 billion against the target of Shs 252.13 billion mainly driven by the depreciation pressures, which increased the Shilling amount that had to be paid for external debt service.
Development expenditure however amounted to lower than planned expenditure of Shs 1,108.76 billion against the target of Shs 1,206.62 billion. This was mainly driven by the lower than planned expenditure in external developments of Shs.318.83 billion against the target of Shs.460.0 billion.
5 East Africa Community Developments
5.1 EAC Inflation11
Except for Tanzania, there was a general slowdown in annual headline inflation across the EAC partner states for the year ending April 2024. Annual headline inflation in Rwanda and Kenya declined from 0.6% and 5.7% in March 2024 to -0.5% and 5.0%, respectively in April 2024. This was mainly on account of a reduction in the prices for food and non-alcoholic beverages during the month.
Conversely, the annual headline inflation rate in Tanzania for the year ending April 2024 increased slightly to 3.1% from 3.0% in March 2024. This was majorly due to an increase in prices for non-food items including; wood charcoal, petrol, household furniture, mattresses and accommodation in hotels.
5.2 EAC Exchange Rates12
The US dollar exchange rate trended differently in the different EAC member countries in April 2024. The Ugandan and Kenyan Shillings appreciated against the US Dollar by 1.9% and 4.0% respectively, while the Tanzanian Shilling, Rwandan and Burundian Francs depreciated by 1.0%, 0.5% and 0.2% respectively.
The Kenyan Shilling appreciated primarily due to issuance of a Eurobond which increased foreign currency inflows in the country during the month.
On the other hand, the exchange rate depreciation in Tanzania was on account of low seasonal inflows from tourism and export crops, which coincided with the impact of monetary policy tightening in advanced economies. The weakening of the Rwandan and Burundian Francs was mainly due to increased demand for the dollar, which outstripped its supply.
5.3 Trade Balance with EAC13
During March 2024, Uganda traded at a deficit with the EAC amounting to USD 193.75 million, an increase from the USD 35.34 million deficit recorded in February 2024. This was majorly on account of a substantial increase in imports from Tanzania, which grew by USD 169.39 million from the previous month.
At country specific level, trade deficits were recorded with Tanzania (USD 297.15 million) and Kenya (USD 17.56 million), while trade surpluses were recorded with D.R.C, South Sudan, Rwanda and Burundi, amounting to USD 54.80 million, USD 44.54 million, USD 15.95 million and USD 5.68 million, respectively.
Imports from the EAC increased by 71.2% to USD 381.58 million in March 2024 from USD 222.92 million the previous month. Exports, however, increased at a slower pace of 0.1%, from USD 187.59 million in February 2024 to USD 187.84 million in March 2024.
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.
Data on Private Sector Credit, CIEA and External sector has a lag of one month.↩︎
Data on inflation for Burundi, D.R.C, South Sudan and Somalia not readily available.↩︎
Data on Exchange Rates for D.R.C, South Sudan and Somalia not readily available.↩︎
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.↩︎
Other Countries include: Australia and Iceland.↩︎
Statistics on trade come with a lag of one month.↩︎
Fiscal data is preliminary.↩︎
Data on inflation for Burundi, D.R.C, South Sudan and Somalia not readily available.↩︎
Data on Exchange Rates for D.R.C, South Sudan and Somalia not readily available.↩︎
Data for Somalia not readily available↩︎