Tuesday, November 3, 2009

IMF to continue support for Uganda’s policies

The International Monetary Fund (IMF) is working on an extension of the current Policy Support Instrument (PSI) that would be time consistent with Uganda’s budget cycle.

IMF Senior Resident Representative, Mr Richardson Thomas J. told Daily Monitor on October 23 the IMF Mission team from Washington is in the country carrying out economic review under the PSI programme.

“Yes, the mission is here and hoping to wind things up from the sixth review under the PSI this week,” he said.

“We are also working on an extension of the current PSI that will run through the end of the current fiscal year. That way in the spring, we can agree with the authorities on a new three year PSI that would be timed to be consistent with the Ugandan budget cycle.”

The Executive Board of the IMF approved the 16 month PSI for Uganda under the IMF’s PSI framework, which intended to support the nation’s economic reform efforts on January 24 2004.

This was after completing the sixth and the final review of Uganda’s economic performance on January under the three-year Poverty Reduction and Growth Facility (RPGF) arrangement and, which saw the IMF approving a disbursement for an amount equivalent to Special Drawing Rights SDR 2.0 million (about $2.9 million). According to the programme, this would bring total disbursements under the PRGF arrangement to SDR 13.5 million (about $19.5 million).

Uganda’s PSI began on February 1, 2006, after the expiration of the PRGF arrangement, which was early extended through January 31, 2006.
The PSI for Uganda aimed at maintaining macroeconomic stability and promoting structural reforms, as well as implement the broader policy agenda as envisaged in the Ugandan authorities’ Poverty Eradication Action Plan (PEAP).

The approval of Uganda’s signifies IMF endorsement of the policies outlined in the program. In addition to macroeconomic stability, the PSI programme would address the next layer of the structural reforms needed further to implement Uganda’s Poverty alleviation strategy.

The PSI framework is designed for low income countries that may need, IMF financial assistance, but still seek IMF advice, monitoring and endorsement of their policies. PSI is voluntary and demand driven.
Since the IMF introduced PSI programme in Uganda more than three years ago it has conducted the review of Uganda’s PSI programme five times.
The IMF past semi-annual review results shows Uganda has relatively done well under the PSI programme.

Six countries have since received support under the PSI: Cape Verde, Mozambique, Nigeria, Senegal, Tanzania, and Uganda. In all cases, these countries have a track record of successful policy implementation, strong growth, and no immediate need for IMF financing.

The IMF PSI has helped countries in at least three ways: It has helped countries develop a macroeconomic policy framework and structural reform agenda; served the authorities well as an internal discipline mechanism as policy challenges emerged; and it has provided a framework for targeted technical assistance and support from the international community, and from private sector.