KAMPALA, Nov. 2 –Recent improvements in public financial management in Uganda are expected to boost revenue collection and the quality of government investments, the International Monetary Fund has said.
It also praised the Government’s efforts in adopting a strong revenue package approved by Parliament in the context of this year’s budget.
The country’s economic development remained favourable, the IMF said, with growth now estimated to exceed 5% in the financial year 2013/14.
But collecting taxes from all economic agents remained a key, IMF noted, while commending the recent elimination of Value Added Tax (VAT) exemptions.
“This needs to be accompanied by strict enforcement by the Uganda Revenue Authority and enhanced compliance from taxpayers,” the IMF said following its third review of the country’s economic programmes.
The fund also urged Uganda to improve its tax-to-GDP ratio before oil revenues come on stream to reduce its dependence on donor assistance or domestic borrowing and finance the countries’ significant investment and social needs.
Additionally, particular attention needed to be paid to the sequence and quality of public investment projects, the fund said.
“Execution and financing have to be consistent with the capacity of the economy to absorb investments without generating inflation or crowding out the private sector, and to repay debt without increasing the risk of debt distress.”
It added: “Progress in regional integration and recent improvements in public financial management are set to support these efforts.
“The government is encouraged to begin preparing the charter of fiscal responsibility as envisaged in the PFM bill. A speedy approval of this bill, now under parliamentary consideration, followed by prompt adoption of its regulations, will facilitate preparations for efficient petroleum revenue management and bring forward the budget cycle to improve fiscal policy efficiency.”
On Monday, the Horn of Africa region which includes Uganda, received more than $8b from international donors to boost economic growth.
Meanwhile, in June, Uganda was urged by the World Bank to overhaul its pension system in order to speed up the country’s economic development and expand social protections.