World Bank Freeze Will Hurt Economy – Analyst
The recent World Bank move to freeze further lending to Uganda needs to be resolved faster because of the negative impacts it has for the economy.
According to development economist Dr. Fred Muhumuza, the indefinite freeze will impact negatively on economic fundamentals and hurt the economy and the country.
The World Bank announced early this month that it had decided to suspend lending more money to Uganda over an outstanding debt.
“The World Bank Group took a decision to withhold lending to Uganda effective August 22, 2016 while reviewing the country’s portfolio in consultation with the Government of Uganda,” the bank said in a statement.
Speaking to local news agency, Uganda Radio Network, Dr. Muhumuza said the World Bank money, although in loan form, increases foreign exchange liquidity which in turn lowers exchange rate, create project jobs, cheapens imports and helps the central bank to tame the economy, among other benefits.
The World Bank said it will continue to “actively work with the Ugandan authorities to address the outstanding performance issues in the portfolio, including delays in project effectiveness, weaknesses in safeguards monitoring and enforcement, and low disbursement.”
Uganda’s Secretary to the Treasury, Keith Muhakanizi, recently said the decision by World Bank to freeze further lending to Uganda is a direct response to the tough austerity measures he has instituted in the management of government finances.
“I’m happy that given the efforts we have done, the World Bank, and, not like in the past, [their] budget cutting [wasn’t] because of corruption and misuse of government resources. Another ‘animal’ that we need to deal with here, is maybe social protection issues and whatever,” Muhakanizi said.
However, Dr. Muhumuza says the government needs to find ways of resolving the stalemate quickly.