The document summarizes Uganda's 2013/2014 budget and economic outlook. Real GDP growth has improved to over 5% due to increased agricultural production and macroeconomic stability supported by prudent monetary and fiscal policies. However, challenges remain in allocating credit to priority sectors like agriculture and improving infrastructure. While public debt levels are manageable, integration into the East African monetary union could impact domestic borrowing. Global economic risks from slowing growth in China and issues in Europe could also impact Uganda's projected 6-7% GDP growth rates in the coming years. Continued macroeconomic stability and effective policy implementation will be important to buttress economic growth.

1. FS 2013/2014 Budget - Uganda
Economic Overview and Outlook
DELOITTE
June 14, 2013

2. Outline
• Output Growth – Mission Accomplished?
• Market Stability – Policy Success or Good Luck?
• Policy Proposals – How do they buttress the strategic
intentions?
• The Rest of the World – A Fly in the Soup?
• Outlook

3. Output Growth – Mission Accomplished?
• 2012/13: Theme – “Priorities for Renewed Economic
Growth and Development”.
• 2013/14: Theme – “The Journey Continues: Towards Socio-
Economic Transformation for Uganda”.
• Sovereign Rating – Standard and Poor’s B+; a higher rating
when major economies are facing downgrades.
7.3
5.9
6.6
3.4
5.1
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2008/09 2009/10 2010/11 2011/12 2013/13
Source: MOFPED - BTTB 2013/14
Overall Real Growth %)

4. Output Growth – Mission Accomplished?
• The real growth improvement described as ‘significant’. Is this the best that
could have happed?
– There was the “small’ matter of donor suspension of budgetary
support, equivalent to 1.3% of GDP;
– Then there lagged effect of the tight monetary policy of 20011/12 that
affected growth via depended credit expansion; a correct policy decision
given that the trade-off is short-term and the benefits is stability surpasses
the cost of output.
• It matters that the neighbours are also on a recovery path.
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
2009 2010 2011 2012 2013
Source: IMF World Economic Outlook, April 2013
Real Output Growth (%)
Burundi
Kenya
Rwanda
Tanzania

5. Market Stability – Policy Success or Good Luck?
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Jan-07
Aug-07
Mar-08
Oct-08
May-09
Dec-09
Jul-10
Feb-11
Sep-11
Apr-12
Nov-12
Source: UBOS
Annual Inflation (%)
Core Inflation (%) Headline Inflation (%)
5.0
7.0
9.0
11.0
13.0
15.0
17.0
19.0
21.0
23.0
25.0
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Source: BOU
Central Bank Rate (%)

6. Market Stability – Policy Success or Good Luck?
0.0
10.0
20.0
30.0
40.0
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Annual Inflation (%)
Core Inflation (%) Headline Inflation (%)
-40.0
-20.0
0.0
20.0
40.0
60.0
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
CPI Decomposition
Food Crops (%) Elec, Fuel & Utilities (EFU) - %

7. Market Stability – Policy Success or Good Luck?
y = 0.293x + 7.048
R² = 0.472
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
-30.0 -20.0 -10.0 0.0 10.0 20.0 30.0 40.0 50.0 60.0
HeadlineInflation
Food Crop Price Changes
Association of Headline Inflation Food Crop Price Change (%)

8. Market Stability – Policy Success or Good Luck?
1,500.00
1,700.00
1,900.00
2,100.00
2,300.00
2,500.00
2,700.00
2,900.00
3,100.00
1-Sep-05
1-May-06
1-Jan-07
1-Sep-07
1-May-08
1-Jan-09
1-Sep-09
1-May-10
1-Jan-11
1-Sep-11
1-May-12
1-Jan-13
Nominal Exchange Rate (US$/UGX)
-14.00
-12.00
-10.00
-8.00
-6.00
-4.00
-2.00
0.00
2.00
2005 2006 2007 2008 2009 2010 2011 2012
Current Acount Balance (% of GDP)
Source: BOU

9. Policy Proposals
• Investment in infrastructure;
• Supporting increased
agriculture production and
productivity;
• Promoting innovation for
Industrialization and private
sector competitiveness;
• Quality and Access of social
services –
water, health, education;
• Fighting corruption in public
service delivery.

10. Policy Proposals – (a) it matters who gets the finance
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000 Jun-07
Nov-07
Apr-08
Sep-08
Feb-09
Jul-09
Dec-09
May-10
Oct-10
Mar-11
Aug-11
Jan-12
Jun-12
Nov-12
Apr-13
Outstanding Credit by the Banking Industry – Private sector (UGX M)
Agriculture
Mining and Quarrying
Manufacturing
Trade
Transport and Communication
Electricity and Water
Building, Mortgage, Constructio
n and Real Estate
Personal Loans and Household
Loans
Source: BOU

11. Policy Proposals – (a) it matters who gets the finance
-
5.0
10.0
15.0
20.0
25.0
30.0
Jun-07
Nov-07
Apr-08
Sep-08
Feb-09
Jul-09
Dec-09
May-10
Oct-10
Mar-11
Aug-11
Jan-12
Jun-12
Nov-12
Apr-13
Share of Private Sector Credit (%)
Agriculture
Mining and Quarrying
Manufacturing
Trade
Transport and Communication
Electricity and Water
Building, Mortgage, Constructio
n and Real Estate
Personal Loans and Household
Loans
Source: BOU

12. Policy Proposal – (b) Will the new Public Debt
Strategy Help Align Resource Allocation?
• At less than 30% of GDP, there is scope for careful
increase in levels of debt:
– Economy is debt sustainable; no risk of debt distress
– Will the rating be put to use soon?
– Will domestic borrowing allocate more credit to priority
sectors?
• When (if) the EAC Monetary Union come to
effect, what will be its implication on domestic debt?

13. The Rest of the World – A Fly in the Soup?
• The Eurozone never fails to disappoint:
Iceland-PIGS-Cyprus.
– The Euro arrangement “feels like a
loveless marriage where the cost of
breaking up is the only thing that keeps
the partners together” – The
Economist, March 23rd – 29th 2013.
• The emerging markets that drove the
world economy during the epitome of
the global economic meltdown have
now joined the fray.
– China is slowing down, and justifiably
so, given that “Growing faster is a poor
alternative to growing up” – The
Economist, April 20th – 26th , 2013.
– The economy of one of the emerging
giants is being described as “Brazil’s
Mediocre Economy” – this week’s issue
of The Economist

14. Outlook
• Real growth has assumed the right trajectory;
• The growth projections of 6.0% by 2013/14; then
6.9% in 2014/15, and subsequently 7.0% looks
attainable:
– They should nonetheless be seen as the best-case scenario
that needs to be tempered with the downside risks, both
local and international.

15. Thank You!