Country Report Uganda August 2012

Country Report Uganda August 2012

Outlook for 2012-16

• The president, Yoweri Museveni, and his National Resistance Movement (NRM) have ruled Uganda since 1986 and will continue to dominate the political scene following a resounding victory in the 2011 elections.
• The negotiation of oil contracts will prove controversial and the opposition will seek to stoke public resentment over the perceived inequity and corruption involved in the deals that are struck.
• The fiscal deficit as a percentage of GDP is expected to narrow to 1.9% in 2013/14 (July-June), before widening in the lead-up to the election in 2016.
• Real GDP growth is forecast to remain below potential, at 5.3%, in 2012 owing to low public spending and weak external demand. It will increase to an average of 6.9% in 2013-15 and will reach 12.9% in 2016 as oil production starts.
• Inflation is forecast to slow from 18.7% in 2011 to 7.2% in 2015 because of lower commodity prices and fiscal tightening in 2012-14. It is forecast to increase to 15.3% in 2016 owing to pre-election spending and the start of oil production.
• The current-account deficit is forecast to widen to 14.8% of GDP by 2015 as import growth accelerates, before narrowing in 2016 as oil production starts.

Review

• The Democratic Party's Mathias Nsubuga won the Bukoto South by-election on July 12th, defeating the NRM candidate, Alintuma Nsambe. The NRM has lost five of the six parliamentary by-elections since the general election in February 2011.
• At a meeting in mid-July the Buganda parliamentary caucus renewed its demand for federo-an independent Buganda within a federal Uganda. Mr Museveni will try to placate it by devolving some powers to regional level.
• The Bank of Uganda cut its main policy rate from 19% to 17% on August 2nd after inflation weakened. The larger than expected cut prompted concerns about the currency, which has been extremely volatile in the past two years.
• The Bujagali hydroelectric power station commissioned its fifth and final turbine in mid-June. It is delivering 250 mw to the national grid, boosting the available supply to around 600 mw. Current peak demand is 450 mw.
• Umeme, the national electricity distributor, is preparing to offer 20% of its shares on the Ugandan and Kenyan stock exchanges later in 2012. Demand for the shares will be boosted by better electricity supply and higher tariffs.
• A strain of the Ebola virus is responsible for the deaths of 16 people since the beginning of July in Nyanswiga village in Kibale district in the west of the country. If it persists, the outbreak will damage Uganda's tourism industry.

Please Note: Due to the Nature of This Report The Toc is Not Available