Uganda registers increase in exports and imports

The export and import sectors saw an increase in activity in the month of June, according to the July ‘Performance of the Economy Report’ outed by the Ministry of Finance, Planning and Economic Development (MoFPED).

The report shows that export earnings increased for the second consecutive month to $337.19million in June from $290.93m in May.

The value of imports increased to $543.6m in June from $435.6m in May.

According to the MoFPED report, the month of July recorded an uptick in economic activity, with the growth resulting from “easing of some of the containment measures that were instituted to prevent

spread of the virus.”

MoFPED further says that monetary policy actions implemented by the government since April have also supported this improvement.

The Central Bank recently announced that it would mantain the Central Bank Rate at 7 percent in July to keep the banking sector stronger.

To ensure economic recovery, the government plans to implement various fiscal measures in FY 2020/21, for instance recapitalizing Uganda Development Bank.

It will also increase funding to Uganda Development Corporation to facilitate public-private partnership investments as part of the import substitution and export promotion strategy.

The government will also expedited payment of arrears owed to the private sector in order to address liquidity constraints faced by suppliers of the government.

The report says the Annual Headline Inflation rose to 4.7 percent from 4.1 percent in June due to an increase in annual core inflation, which rose to 5.8 percent from 4.9 percent recorded in June 2020.

The shilling continued to strengthen against the US dollar in July, registering an appreciation of 0.9 percent on account of increased inflows amidst subdued demand.

“The shilling traded at an average mid-rate of Shs3,703.5 during the month compared to Shs3,737.9 recorded in June,” reads the report.

The average lending rates for both shilling and foreign currency-denominated credit edged upwards in June as banks are more risk-averse because of the COVID-19 pandemic, says the report.

Lending rates for shilling denominated credit rose to 19.3 percent in June from 18.8 percent recorded the previous month.

Similarly, according to the report, lending rates for foreign currency-denominated credit increased to 5.5 percent in June 2020 from 4.2 percent the previous month.