Uganda’s economic growth is set to accelerate to 5.3 per cent in fiscal 2014/15, driven by infrastructure investment.
This is aimed at maximizing benefits from an expected oil boom, outgoing finance minister Maria Kiwanuka said.
She was speaking to Reuters before she was moved in a cabinet reshuffle on Sunday to become presidential advisor on finance.
Her forecast was the government’s first growth estimate for the fiscal year ending in June, after Uganda rebased its gross domestic product in November.
In 2013/14, the economy grew 4.5 per cent and Kiwanuka said she expected growth to reach 6 per cent annually in the coming years.
“We have an ambitious public infrastructure investment programme covering power, roads. Manufacturing and construction have also picked up again after the effects of the global economic crisis,” Kiwanuka told Reuters on Friday for the Reuters Africa Investment Summit.
East Africa’s third-biggest economy is due to begin oil production in 2018 and Kiwanuka said she expected oil prices would recover and so would not affect long-term investment in the sector.
“It has happened before, the prices will go back. I don’t see this short-term price movement impacting the long-term investments,” she said.
Her views differed from those of central bank Governor Emmanuel Tumusiime-Mutebile, who said last week that low crude prices were likely to slow down investment in Uganda’s petroleum sector.
President Yoweri Museveni named Matia Kasaija to replace Kiwanuka as finance minister on Sunday, in a cabinet reshuffle seen as rewarding close allies before a presidential election early next year.
Kiwanuka said investor worries about the possibility of a surge in public spending ahead of the election were unwarranted, though they have already pushed up yields on government debt.
“There will always be investment concerns around about the time of any elections in Africa,” she said. “The government of Uganda has had a very conservative fiscal record … We’ll remain within spending thresholds.”
She also said that as Uganda was still an oil importer, low crude prices were likely to improve the country’s current account position in the medium term.
According to the latest central bank data, Uganda’s current account deficit widened to $808 million in August-October last year, from $488 million for the three months through July.
Museveni, already one of Africa’s longest serving leaders, is widely expected to seek re-election in 2016. Shortly after the last election in 2011, Uganda saw inflation hit an 18-year high above 30 percent, a sharp depreciation of the shilling and a steep rise in interest rates.
Government geologists estimate the country’s crude reserves, along its border with the Democratic Republic of Congo, at 6.5 billion barrels.
Uganda is at various stages of implementing several multi-billion dollar infrastructure projects, including two hydropower dams, a refinery, express highways and a railway line.