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Uganda: Balance of Payments
Country Study > Chapter 3 > The Economy > Foreign Trade and Assistance > Balance of Payments

BALANCE OF PAYMENTS


The economic decline of the 1970s caused a trade deficit, largely the result of a drop in official coffee exports and a steady capital outflow. The government strengthened financial controls in 1981, after Uganda had registered a US$169.2 million trade deficit. By 1984 these controls had enabled Uganda to convert its deficit to a US$65.7 million trade surplus. This improvement, together with declining net imports of services, changed the current account balance from a deficit of US$170.6 million in 1981 to a surplus of US$107.1 million in 1984. During the same three years, however, an outflow of US$120.4 million in short-term capital led to a decrease in reserves of US$56.2 million in 1984. In 1985 the trade balance remained positive, as did the balance on current account.

During the 1980s, the volume of Uganda's major exports maintained a fairly consistent increase, despite the decline in unit value. In particular, the country's major export, coffee, experienced erratic price movements between 1980 and 1987. The price of coffee dropped sharply for two years but recovered to 87 percent of the 1980 level in 1984. It then plummeted to about 74 percent in 1985 and improved to 91 percent in 1986. This recovery was not sustained in 1987, when the index fell sharply to 66 percent. Similarly, the unit values of tea and tobacco, two other traditional exports, also declined, while the price index of cotton, another traditional export crop, recovered from 57 percent in 1986 to 66 percent in 1987. An increase in the volume of exports was not enough to compensate for the loss caused by the sharp fall in unit value. Export income from coffee fell sharply from US$394 million in 1986 to US$264 million in 1989. Cotton suffered a similar fate, dropping from US$5 million to US$4 million during the same period.

While export revenues fell, the value of many imports increased. During 1987 total merchandise imports increased to a record US$635 million. Of this amount, imports financed by official resources were US$249 million on a cash basis, including suppliers' credit, US$34 million received on barter terms, and US$23 million acquired through the EAC Compensation Fund. Private imports using unofficial foreign exchange were estimated at US$98 million. Loans and grants financed imports worth US$228 million. A major part of the rise in the import bill consisted of fully funded capital goods considered necessary inputs for national rehabilitation and development projects.

Reflecting the decline in the overall value of exports and increased import costs, the trade deficit increased sharply in 1987 to US$301 million. The current account (trade balance, net services, and unrequited transfers, taken together) registered a marginal surplus in 1986 but deteriorated substantially during 1987 to register the highest deficit since 1982. At the same time, the capital account balance strengthened in 1987 to register a surplus. This increase resulted in large part from the improvement in medium-term and long-term loans. In sum, the overall balance showed a US$3 million deficit in 1987, a substantial decline from the US$127 million surplus registered in 1986. Domestic (bank and nonbank) sources financed approximately 75 percent of the deficit while external sources financed the remainder.

Data as of December 1990




Last Updated: December 1990


Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Uganda was first published in 1990. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on Factba.se.

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