World Bank agrees $300m coronavirus loan to Uganda

The World Bank Group said on Tuesday that its board had approved $300m (Shs1.1 trillion) in budget support for the Uganda government to boost its fight against the coronavirus and to support the economy.

The loan, the bank’s first aid instrument given directly to the government in more than six years, will be used to bridge revenue collection gaps and support activities providing “immediate relief to individuals and businesses that have been most affected by the [Covid-19] pandemic,” according to a statement.

“The Covid-19 pandemic has had a significant impact on the economy and livelihoods. This budget support operation will enable the government to provide vital services, social safety nets and a more robust shock-responsive system for the long term, and the economy to recover faster,” Tony Thompson, the World Bank country manager for Uganda said.

The policy measures to be supported by the loan include the distribution of free and subsidised agricultural inputs to farmers, an expansion of social protection programs, utility subsidies, and tax exemptions for supplies and equipment used in the treatment of the coronavirus.

The government has also promised to provide tax relief to businesses hit by Covid-19. On its part, the Bank of Uganda approved measures to support the financial institutions it supervises which include a moratorium on dividends and bonus payments, liquidity assistance to distressed institutions, and expanded repurchase operations.

The facility is the second loan to Uganda approved by the World Bank in as many months. In May, the bank announced that was providing Uganda with a $48m (Shs181.7bn) low-interest loan to support its desert locust response.