Posted on January, 21, 2019 at 10:17 am
By MARTIN LUTHER OKETCH
Kampala. Uganda’s gap between the value of imports and exports (current account deficit) has doubled due to a sharp increase in government and private sector imports.
The gap, which has persistently been rising over time, increased by Shs2.5 trillion (about $732m) to $1.74b for the year ending October 2018, compared to the same period in 2017.
Data from the Central Bank indicates that the growth was influenced by an increase in fuel, industrial equipment, chemicals and motor vehicles imports for the 12 months under review.
Uganda continues to be a net importer, which has subsequently led to a constant outflow of foreign exchange.
The gap, according to Bank of Uganda, is projected to widen further largely on account of a pickup in imports by government and private sector partly due to planned development of the oil and gas sector and the associated increase in infrastructure investments.
However, the growth could be moderated by projected inflows expected in the 2018/19 financial year.
According to Bank of Uganda, the trade deficit has also widened with imports growing by $829m compared to $138m for exports.
The trade deficit expanded by $514 million to $2.1b during the same period.
However, growing imports boosted tax revenues between October 2017 and October 2018.
Total international trade taxes amounted to Shs610.2b in August. This was against a target of Shs542b, which created a surplus of Shs67.8b.
According to the 2019/20 National Budget Framework Paper, Uganda’s trade deficit has been reducing over the last five years from $2.6b in the 2013/14 financial year to $2.4b in the 2017/18 financial year.
However Uganda continues to import more than it exports, thus registering a trade deficit.
Source: Daily Monitor