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Uganda 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
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