At least 780,000 Ugandans may be pushed into poverty as the spread of coronavirus takes a toll on Uganda’s economy, according to government.
Mr Matia Kasaija, the minister of Finance, Planning and Economic Development on Thursday told Parliament that the low activity in the industry and services sectors will result into loss of jobs, further leading to a decline in economic growth and an increase in the level of poverty.
“The number of people that could be pushed into poverty is estimated at approximately 780,000,” he said.
According to the minister, the tourism sector alone will severely be affected by a sharp drop in tourists coming to Uganda following extensive travel restrictions in the USA, Europe and Asia.
“Tourism earnings are also expected to decline significantly in the last four months of the financial year,” he said in a government statement to the House.
According to the minister, exports are expected to decline in the last four months of the financial year, on account of a sharp reduction in global demand and travel restrictions imposed by Uganda’s key trading partners in the Middle East, European Union and Asia.
Imports
In addition, he said, imports are likely to be affected by travel restrictions and a reduction in demand within the local economy. The majority of Uganda’s imports come from Asia, particularly China which has been the most affected country. Overall, imports are expected to decline by 44% in the last four months of this financial year.
Loan Disbursements
These, he said, are projected to decline by 50 per cent in the last five months of the financial year because of the likely delays in projects execution and a disruption in the supply of inputs for the projects.
BoP
Given the above assumptions, the current account balance (CAB) in FY20I9/20 is projected to widen by US$ 363.1 million (12.7%) Consequently, foreign exchange reserves are expected to decline from 4.2 future months of imports to about 3.5.
Commercial banks
The minister also said the ratio of non-performing loans to total loans would worsen from 4.7 percent to 5.9 percent which has negative impact on private sector credit growth as well as economic growth.
Revenue collections
Kasaija added that the revenue collections will register an additional shortfall of about Shs82.4b for the remaining period of the FY20l9/20 (March-June) and about Sh187.6b in FY2020/21.
