All currencies in the East African Community (EAC) registered a depreciation against the US dollar in the month of November, except the Tanzanian shilling.
The Tanzanian shilling registered a 2.5% appreciation against the dollar, according to the economic performance report for November released by Uganda’s Ministry of Finance.
The Burundian and Rwandan Francs depreciated by 0.16% and 1.03%, respectively, while the Kenyan Shilling and Ugandan Shilling declined by 0.15% and 0.3%, respectively.
The Uganda Shilling has largely been on an appreciating trend since March 2024, with the exception of November.
In November 2024, the Uganda Shilling traded at an average midrate of Shs. 3,678.6 per US$ compared to an average midrate of Shs. 3,667.9 per US$ the previous month.
“This was largely on account of strong corporate and interbank demand for the dollar, which outweighed the inflows mainly from coffee exports and remittances,” the report reads.
The Central Bank Rate (CBR) remained unchanged at 9.75% in November following its downward revision the previous month. The Central Bank opined that this rate would be adequate to contain inflation around the medium-term target of 5%.
The weighted average lending rates for shilling-denominated credit increased to 19.43% in October 2024 from 18.84% in September 2024.
The report says that this was partly due to higher yields on government securities and an increase in consumer demand as the economy continues to recover.
In October 2024, the stock of outstanding private sector credit increased by 0.3%, from Shs. 22,209.11 billion in September 2024 to Shs. 22,270.87 billion in October 2024. Both Shilling and foreign currency-denominated credit recorded an increase in the stock of credit.
“In November 2024, the government raised a total of Shs. 1,080.7 billion through the issuance of treasury instruments, with Shs. 414.8 billion from treasury bills and Shs. 665.8 billion from the yields (interest rates) on treasury bills edging upwards for all tenors, i.e., 91-day, 182-day, and 364-day tenors at 11.6%, 13.6%, and 14.9% in November 2024, from 10.8%, 13.4%, and 14.5% in October 2024, respectively.”
“Likewise, yields edged upwards for all bonds, with the 3-year, 10-year, and 20-year tenor bonds increasing to 15.80%, 16.50%, and 17.50% in November from 15.50%, 16.25%, and 16.86%, respectively,” the report adds.
In the fiscal sector, government fiscal operations in November 2024 resulted in a net borrowing of Shs. 1,344.86 billion, which was lower than the planned Shs. 1,696.50 billion.
This, the report says, was mainly due to lower than expected government expenditure on externally financed project activities.
“Overall, government operations for the month show that both expenses and net acquisition of non-financial assets were below their respective program targets.”
Total revenue collections in the month of November 2024 amounted to Shs. 2,670.64 billion against the planned target of Shs. 2,640.97 billion, registering a surplus of Shs. 29.67 billion. This surplus was primarily attributed to grants disbursements that exceeded their respective target by Shs. 61.93 billion.
Total government expenses amounted to Shs. 3,514.43 billion against a program of Shs. 3,657.55 billion. This lower than expected spending was largely attributed to lower than planned spending under compensation of employees and other expenses.
INFLATION
Annual headline inflation remained unchanged at 2.9% in November 2024, the same rate recorded in October. This stability was due to declines in prices for transport services, inpatient care services, and liquid fuels (petrol and diesel), which offset the increase in prices of some food items such as milk and Irish potatoes.
Annual core inflation slightly decreased to 3.8% from 3.9% registered the previous month, mainly on account of a decrease in prices of transport services and inpatient care services.
“In particular, prices reduced for taxi services (both short and medium distances), school transport services, domestic flight services, consultation, and hospitalization services in November 2024 compared to the same month last year.”
On the other hand, other goods inflation increased slightly to 2.2% in November, from 2.1% in October 2024, largely on account of an increase in prices of meat (beef), goats’ meat, fresh tilapia fish, maize flour, refined oil, and domestic beer (bottled).
In the same manner, annual Energy, Fuels, and Utilities (EFU) inflation dropped to 2.2% in November, down from 3.3% in October. This was on account of a reduction in liquid energy fuels inflation from -5.4% in October 2024 to -7.8% in November 2024 as prices of petrol and diesel dipped to Shs 5,105 per liter and Shs 4,691 in November 2024, down from Shs 5,564 per liter and Shs 5,075 in November 2023.
Prices of food crops and related items continued to decline in November 2024, although at a slower rate when compared to the previous month. Annual food and related items inflation was recorded at -4.0% in November 2024 from -5.3% the previous month.
