Uganda will receive an emergency loan worth $491.5 million from the International Monetary Fund to help cushion its economy from the impact of the new coronavirus, the fund said on Wednesday.
Key sectors of the East African economy such as tourism have taken a heavy blow from the crisis. The effect has been compounded by a lockdown of the entire population to curb the spread of the virus.
“The weakening economic conditions emanating from the COVID-19 pandemic have put significant pressures on revenue collection, expenditure, reserves and the exchange rate, creating urgent large external and fiscal financing needs,” the IMF said in a statement.
“The IMF’s emergency financial support under the Rapid Credit Facility, along with the additional donor financing it is expected to help catalyse, will help address Uganda’s urgent balance of payments and budget support needs.”
The Ministry of Finance projects the country’s foreign exchange reserves will decline to the equivalent of 3.5 months’ worth of imports from 4.2 months’ worth as exports slump due to the global pandemic.
Countries receiving loans extended under the IMF’s Rapid Credit Facility pay no interest and have 10 years to return the money, according to the Fund’s website.
Uganda’s central bank expects economic growth to fall to 3%-4% for the financial year to June from its previous projection of 5.5%-6%, as COVID-19 slashes activity in manufacturing, entertainment and trade.
Uganda has so far recorded 98 coronavirus cases but no deaths.
For about a month and a half from late March the country implemented one of Africa’s strictest lockdowns. Authorities this week began to gradually loosen it after President Yoweri Museveni declared the virus tamed.