The outstanding stock of private sector credit (PSC) in Uganda increased by 0.9 percent in August 2019 to Shs15,357.38 billion, up from Shs15,226.26 billion recorded in the previous month, according to the Finance ministry’s Performance of the Economy Report for September 2019.
The ministry in its report attributes the growth in PSC stock to the supportive monetary policy coupled with high levels of economic activity. The Bank of Uganda has set its bank rate at 9 percent for October, from 10 percent in August.
The report says loans extended to the private sector amounted to Shs 1,150.89 billion in August, with 19 percent of the approved loans going to the trade sector which accounted for the biggest share in the month.
According to the report, agriculture was one of the sectors that registered the biggest improvement in terms of shares as it accounted for 17 percent of approved loans in August 2019, up from 9 percent registered for the month before. Other sectors to receive notable shares in August include; transport and & communications, electricity and water services (17 percent), and personal and household loans (15 percent).
Gov’t expenditure attracts Shs692 billion deficits
Government operations during the September resulted into a Shs 692 billion deficit which was higher than the programmed Shs 623 billion. The ministry attributes the deficit to shortfalls in revenues and grants which were offset by the underperformance in expenditure and net lending.
“Domestic revenues during the month totalled to Shs 1,381 billion which is an 89% performance against the programme of Shs 1,560 billion since both tax and non-tax revenues registered shortfalls. All major tax categories registered short falls as direct, indirect and international taxes were below their targets by Shs 27 billion, Shs 52 billion and 66 billion respectively,” the report says.
According to the report, the poor performance in international taxes was largely due to lower imports than had been projected for the month. “Non-Tax Revenue (NTR) during the month amounted to Shs 81.68 billion registering a Shs 37 billion shortfall.”
It says expenditure and net lending in September amounted to Shs 2,143 billion which was Shs 213 billion below the program, as recurrent expenditures were above projection by Shs 52 billion as both wages and salaries and other recurrent expenditures performed above their set targets.
However the report says there was lower expenditure in both Development expenditure (Shs 82 billion) and net lending (Shs 183 billion) as both externally financed and domestically financed development projects performed below the projection for the month.
Uganda’s trade balance with the EAC
According to the report, during the month of August 2019, Uganda traded at a surplus with all EAC Partner States save for Tanzania and Kenya. Within the region, Kenya was the main destination of Uganda’s exports, followed by South Sudan.
Over the same period, Tanzania was the largest source of imports. Overall, Uganda traded at a deficit with all EAC Partner States combined, although a trade deficit of US$ 22.7 million was recorded in August 2019 compared to a surplus of US$ 61.09 million recorded a year ago.
Uganda’s exports to EAC declined by 28.2 percent to US$ 88.64 million in August 2019 from US$ 123.47 million recorded a year ago. On the contrary the import bill increased by 78.5 percent from US$ 62.38 million in August 2018 to US$ 111.33 million in August 2019.
Merchandise trade deficit narrows to US$181 million
Uganda`s merchandise trade deficit narrowed both on an annual and monthly basis following growth in export revenues and a reduction in the import bill, the report says. On a monthly basis, Uganda`s merchandise trade deficit narrowed by 16.8 percent (US$ 36.6 million) to US$ 181.43 million in August from US$ 218 million in July 2019. “Compared to August 2018, the merchandise trade deficit narrowed by 33.2% (US$ 36.57 million) from US$ 271.43 million to US$ 181.43 million in August 2019,” the report adds.
The value of merchandise exports increased both on an annual and monthly basis. Export earnings grew by 1% from US$ 318.43 million registered in July 2019 to US$ 321.67 million in August 2019. The report tags the increase to increased earnings from commodities of maize, coffee, fish and sim sim.
“Increased earnings from maize and sim sim follows an increase in the prices, whereas, the growth in earnings from fish and coffee are explained by increases in their respective volumes. Compared to the same month last year, export receipts increased by 9.4% from US$ 293.93 million to US$ 321.67 million in August 2019,” the report says.
Destination of Uganda’s exports
The report says the Middle East was Uganda’s main destination for merchandise exports in the month of August 2019, followed by EAC, then the Rest of Africa. In comparison with the preceding month, exports to EAC and the Rest of Africa increased whereas exports to other regions declined. Within the EAC, Kenya was the main destination of Uganda`s exports, whereas, United Arab Emirates was the top destination in the Middle East.
Uganda’s merchandise imports
The value of merchandise imports declined both on a monthly and annual basis. The import bill reduced by 6.2 percent to US$536.42 million in August 2019 from US$503.1 million in July, primarily driven by a decline in private sector imports (both oil and non-oil imports).
Oil private sector imports declined by 11.8 percent whereas non-oil private sector imports decreased by 6.6 percent. Compared to August 2018, the import bill decreased by 11 percent from US$ 565.36 million to US$549.85 million in August 2019. Both Government and private sector imports declined.
Origin of Uganda’s imports
Asia, EAC and Middle East were the largest sources of imports, contributing 42.5 percent, 22.1 percent and 12.8 percent respectively during the month of August 2019. Of the total Imports from Asia, 86.7 percent were from China, India, Indonesia and Japan. Kenya and Tanzania contributed 95.6 percent of the total imports from EAC region.
Trade balance by region
The country traded at a surplus with the Middle East, European Union, and Rest of Africa, whereas Uganda posted merchandise trade deficits with the regions of Asia, Rest of Europe and EAC. Uganda had the biggest surplus with the Middle East (US$ 25.09 million) and the largest deficit with Asia (US$ 194.78 million). In the month of August 2019, Uganda traded at a deficit of US$ 22.7 million with the EAC an improvement from a deficit of US$ 51.94 million reported the earlier month.