Statement by Luc Aden at the Board meeting of May 20, 1997

International Bank for Reconstruction and Development 86843 International Development Association International Finance Corportation Multilateral Investment Guarantee Agency FOR OFFICIAL USE ONLY CONFIDENTIAL EDS97-168 May 20,1997 Board Meeting of May 20, 1997 Statement by Luc Aden, Alternate Executive Director Country Assistance Strategy (CAS) for Uganda As the Country Assistance Strategy document shows, Uganda has performed well in the last ten years. Over this period, growth has averaged 6.4 percent. In the last five years, inflation has consistently been low, the result of a strict fiscal policy. Uganda has also carried out structural reforms, including import liberalization, export market opening to competition, foreign exchange liberalization, privatization, civil service downsizing and reform of the financial sector. The principal sources of the recent growth have been industrial output as well as export and marketed food crops. As a result, a wide spectrum of the population of Uganda has benefited from economic growth over the period. However, those households that did not have access to the markets have gained much less and, as the document points out, some have grown even poorer. Moreover, households with little or no education or land holdings have not fared well. Despite progress achieved from the recent coffee boom and under policies of export crop liberalization, poverty is still wide-spread in Uganda. To fight poverty, the government has adopted bold policies, under its Poverty Eradication Action Plan (PEAP), which integrate poverty issues in the national development strategy. The objectives of the PEAP are ambitious but reasonable. The thrust of the policies is to ensure both a sustainable growth and more widely spread benefits to the Ugandan population. The government's policies call for investment into productive capacity in traditional as well as non traditional agricultural export activities and into labor intensive services. They also call for investment in those infrastructure and public services which can generate greater productivity for the most vulnerable population groups, including improved access to and quality of education and health services, improved institutional capacity and good governance. Finally, the PEAP policies call for increased private sector investment and improved financial services. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not othe:rwise be disclosed without World Bank authorization. ·..wrr--·-.  2 The recent decision on the Ugandan external debt, under the HIPC Debt Initiative, should release resources that the Ugandan authorities can allocate to spending in the priority areas. Moreover, the implementation measures of this initiative will ensure an adequate macroeconomic and structural framework, which will create the appropriate environment for growth. I endorse the focus placed by the Country Assistance Strategy on the higher case scenario which aims at reducing poverty through a sustained high economic growth strategy (7 percent per year). Although, the precise package designed to ensure such a growth is not specified, I am confident that it can and will be formulated by the Ugandan authorities. As the report rightly points out, such a growth is well within the Ugandan economy's capacity and is consistent with its past performance. Moreover, the government of President Museveni has consistently demonstrated its commitment to growth and poverty reduction in the recent years. I finally endorse the economic sector work that the Bank staff plan to undertake during the next few years.