The International Monetary Fund (IMF) has expressed optimism that the Ugandan economy may likely hot a double digit growth with the start of commercial crude oil production in the country, and that would propel economic growth in the next financial year,
Uganda’s economy would race to 10.8% growth in the 2025/2026 fiscal year which starts in July, up from a projection of 6.2% in the previous period, the IMF said in a recent published report.
“Growth is expected to strengthen, boosted by the start of oil production, which will make (a) lasting improvement (to) the fiscal and current account balances,” the IMF said in the report.
This is coming after nearly 20 years of delay, as the east African country is finally expected to commence production and export of crude oil next year from fields in its west. Commercial reserves were discovered in 2006 but a range of factors including disputes with oil firms over development strategy and lack of requisite infrastructure had delayed production.
At peak Uganda is seen pumping 240,000 barrels of oil per day from its reserves, which are estimated at 6.5 billion barrels.
The IMF said Uganda’s foreign exchange (FX) reserves had continued to decline, and urged intervention by the central bank including a “reduction in government imports, along with stepped up FX purchases and greater exchange rate flexibility.”
The country’s FX reserves fell to $3.2 billion in June, down from $3.7 billion in December 2023, because of the high cost of servicing debt, the government’s inability to secure cheap credit, and limited hard currency purchases, the IMF said.
