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IMF lowers Uganda growth projection, cites oil investment delays

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Uganda’s economy is likely to grow by 6 per cent in the 2019/2020 (July-June) financial year, down from an earlier projection of 6.3 per cent, due to delays in the public investment needed to start oil production, the International Monetary Fund (IMF) said.

“Downside risks have increased linked to uncertainty related to oil production,” the Washington DC-based fund said in a statement published on Wednesday. Its initial forecast had been issued last year.It added that “the electoral period, and the complex external context” also weighed on the growth outlook.

Delays in providing key pieces of infrastructure like a pipeline and a refinery have prevented the start of oil production in the country.

Crude reserves in fields in Uganda’s west were discovered about 14 years ago and authorities now say production may start at the earliest in 2022, although ongoing disagreements with international oil firms may further delay that date.

The fields are owned by France’s Total, China’s CNOOC and Britain’s Tullow Oil, with each holding an equal stake.Uganda is also due to hold a presidential election next year and incumbent Presidential Yoweri Museveni,75, in power since 1986, is expected to seek re-election.

Delays in providing key pieces of infrastructure like a pipeline and a refinery have prevented the start of oil production in the country

He will likely face a strong challenge from pop star-turned- lawmaker Robert Kyagulanyi who uses his popular music and youthful energy to amass support.The IMF also said the government was experiencing “large expenditure pressures” that were straining the budget and fuelling public borrowing. It urged the government to keep to a realistic budget and maintain debt sustainability.

Uganda’s public debt has ballooned in recent years due to large loans from China and is seen surpassing the crucial 50 per cent of GDP threshold in the 2021/2022 financial year.The projected revenue for the 2019/20 financial year could fall short by 9 per cent amid delays in implementation of some planned tax-generating measures.

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