S&P maintains Uganda’s rating at BB Stable
KAMPAL, JULY 11 – Global Ratings agency has maintained Uganda’s long- and short-term foreign and local currency sovereign credit ratings at BB with a stable outlook in its latest assessment released on July 8.
Although S&P fou8nd that implementation of large government funded infrastructure projects had caused a transient deterioration in Uganda’s fiscal position projected to last until 2018,economic growth remains strong, inflation pressures are receding and the Ugandan shilling is stabilizing. The government’s domestic financing costs have declined.
“We are therefore affirming our ‘B/B’ ratings on Uganda.The stable outlook balances the risks from a temporary worsening in the government’s fiscal position due to spending on public-sector infrastructure projects against our expectation that the country’s fiscal and external metrics will improve once the projects are completed, triggering an increase in the productive capacity of the economy” the agency says.
Commenting on the latest rating, BoU Governor Tumusiime– Mutebile said he was happy to note that “once again, international analysts are expressing confidence in the medium term prospects for the Ugandan economy on the basis of our track record of maintaining macroeconomic stability and sustainable debt levels amid an uncertain global economic environment.”
S&P noted that the ratings on Uganda were constrained by low per capita GDP and large twin current account and fiscal deficits. “At the same time, the ratings are supported by relatively moderate external financing needs and our assessment that there is some monetary policy flexibility,” the agency said.