Uganda - Enhanced Heavily Indebted Poor Countries (HIPC) Debt Initiative

CONFIDENTIAL INTERNATIONAL MONETARY FUND AND 40637 THE INTERNATIONAL DEVELOPMENT ASSOCIATION UGANDA Initiative for Heavily Indebted Poor Countries Completion Point Document Prepared by the Staffs of the Fund and the IDA' March 20, 1998 Contents Page I. Introduction ..................................................... 3 II. Summary of Economic Performance and Social Reforms ............. 4 A. Economic Performance .......................................... 4 The 1997/98 ESAF-supported program ............................ 4 IDA-supported structural reforms ................................. 5 The medium-term program ...................................... 7 B. SocialReforms ................................................. 8 Ill. NPV Calculation for End-June 1997 and Debt SustainabilityAnalysis ..... ........ 9 A. NPV of Debt-to-Exports Ratio for End-June 1997 ...................... 9 B. Summary of Debt SustainabilityAnalysis ............................ 10 IV. Assistance Under the HIPC Initiative .................................... 12 A. Status of Creditor Participation .................................... 12 Multilateral creditors ......................................... 12 Bilateral creditors ............................................ 14 B. Amounts and Delivery Profile of Assistance........................... 14 V. Conclusions ........................................................ 16 'Approved by Evangelos A. Calamitsis and Chanpen Puckahtikom (IMF), and Paul Isenman and James Adams (IDA).  -2- Text Box 1. IDA-Supported Structural Reforms ............... ...................... 6 2. Assumptions Used in the Debt SustainabilityAnalysis (DSA) ..... ............ 12 3. Stylized Assumptions for Debt Relief from MDBs ......................... 13 Tables 1. Social Outcome Indicators, 1994/95-2004/05 .17 2. NPV of Debt and NPV of Debt-to-Exports Ratio, End-June 1997 .18 3. Balance of Payments, 1994/95-2016/17 .19 4. IDA HIPC Assistance, 1998/99-2008/09 .21 5. Delivery of IMF Assistance Under HIPC Initiative, 1998/99-2006/07 .......... 22  -3- I. INTRODUCTION 1. In April 1997, the Executive Boards of IDA and the Fund decided in principle on Uganda's qualificationfor assistance under the HIPC Initiative, on a one-year interval to reach the completion point, and on the amounts of their respective assistance at the completion point subject to satisfactory assurances of participation by Uganda's other creditors. 2 Furthermore, the Executive Board of the Fund made the completion point conditional on approval of a new three-year arrangement under the Enhanced Structural Adjustment Facility (ESAF) for Uganda and the first annual arrangement thereunder, and on completion of the midterm review under the first annual arrangement under the ESAF. The first condition was met on November 10, 1997 when the Fund approved a new three-year ESAF arrangement and the first annual arrangement thereunder. With a view to meeting the second condition, the staffand management have recommended that the Fund's Executive Board complete the midterm review of the ESAF. 3 Assistance by IDA under the HIPC Initiative was made conditional on structural and social development performance criteria agreed with the authorities to be monitored under IDA-supported programs. The first tranche of the Third Structural Adjustment Credit (SAC III) was disbursed upon satisfactory compliance with conditionalities of effectiveness,and progress on reforms required for disbursement of the remaining tranches is satisfactory. 4 With respect to the social sector reforms discussed in the IDA President's Report on the HIPC Initiative dated April 11, 1997, ' progress also remains satisfactory, as strategies in the areas of health, education, and rural finance have been developed and are being implemented. 2. This document summarizes performance in connection with the midterm ESAF review, under IDA's SAC III, and in social reforms (Section II). It updates the debt sus- tainability analysis (DSA), calculates the actual net present value (NPV) of debt-to-exports ratio at end-June 1997 after assistance under the HIPC Initiative committed at the decision point, and compares it with the target of 202 percent (plus or minus 10 percentage points) determined by the two Executive Boards in April 1997 (Section III). The paper goes on to 2 The decision point document was "Uganda-Final Document on the Initiative for Heavily Indebted Poor Countries (HIPC)" EBS/97/71, 4/11/97 and Report No. P7109-UG, 4/11/97. 3 See theaccompanying staff report on the 1998 Article IV consultation and midterm review under the first annual arrangement under the ESAF. 4 The maximum import duty was reduced, overall budgetary allocations for priority areas increased in the 1997/98 budget, and a framework for greater accountability at the control and district levels has been worked out. 5 Report No. P7109-UG "Assistance to the Republic of Uganda Under the Heavily Indebted Poor Countries Debt Initiative" and "Final Document on the Initiative for Heavily Indebted Poor Countries."  -4 - report on the status of creditor participation in the HIPC Initiative for Uganda, and on the amounts and proposed delivery profiles of assistance (Section IV). Conclusions are presented in the Section V. U. SUMMARY OF ECONOMIC PERFORMANCE AND SOCIAL REFORMS A. Economic Performance The 1997/98 ESAF-supported program 3. The broad objectives of the 1997/98 (July-June) program were to achieve real GDP growth of 7.5 percent, contain inflation to 5 percent, and maintain gross international reserves at 4.6 months of imports of goods and services. Structural reforms were to be strengthened in the areas of the civil service, public enterprise restructuring, privatization, the financial sector, and in trade and capital account liberalization. 4. Developments during the first half of 1997/98 indicate that the government adhered to programmed policies and measures, and a number of the program's targets and objectives were achieved or exceeded. However, torrential rains (associated with El Ninio)reduced agricultural production and seriously disrupted transportation, with adverse consequences for growth and inflation. With the expected return to normal weather conditions, real GDP growth is likely to pick up in the second half and reach 5 percent for 1997/98 as a whole. Inflation, which accelerated to 10.5 percent in January owing to higher food prices, is expected to fall to 7.5 percent by the end of the year as food supplies gradually improve; underlying (nonfood) inflation has remained low (below 3 percent) during the last 12 months. 5. The overall fiscal deficit for the first half of 1997/98 was broadly in line with the program, as were revenues and expenditures. The government implementedthe program's revenue measures to improve customs and tax administration and to broaden the tax base, at the same time as the tax and incentive structures were reformed through reductions in import tariffs and excise tax rates, and replacement of tax holidays with accelerated depreciation allowances. Expenditure on program priority areas and defense were close to programmed amounts, while overruns on nonwage "other" recurrent expenditures were largely offset by lower wage payments, owing to delays in placing teachers hired under the Universal Primary Education (UPE) program on the government's payroll. A program to phase out teachers' salary arrears has been agreed in the context of IDA's proposed Education Sector Adjustment Credit (ESAC). Notwithstanding satisfactory performance "above-the-line" and implementa- tion of programmed measures, net credit to government in December 1997 was higher than the program's ceiling owing to a more rapid liquidation of domestic nonbank liabilitiesthan projected, primarilyin the form of reduced check float. For the year as a whole, the pro- grammed target of 5.8 percent of GDP for the overall fiscal deficit (on a commitment basis, excluding grants) is achievable, provided that the authorities continue to implement the programmed measures, and assuming a return to normal weather conditions.  -5 - 6. Performance in the monetary and external sectors remains broadly on track. In light of some uncertainty regarding the rate of decline in prices, the authorities have tightened moderately their money and credit targets for end-June 1998. Weather-related shortfalls in exports of coffee and other agricultural products were largely offset by weaker imports (following disruption of transportation caused by the rains) and by increased private transfers, reflecting higher foreign direct investment (which is provisionally included in transfers). The external reserve target for December was met and remains achievable for the year as a whole. The exchange rate is market determined, and the authorities continue to carefully monitor its effects on export competitiveness. External arrears to multilateral creditors have been cleared either through concessional rescheduling (US$10.6 million) or in cash payments (amounting to US$4.9 million). The remaining arrears are to non-Paris Club bilateral creditors, for which the authorities remain fully committed to seek settlement on terms comparable to those of the Paris Club as soon as possible. They have recently reached agreement in some instances (for example, with Tanzania) and have repeatedly contacted other bilateral creditors with a view to reactivating and/or accelerating negotiations in the context of the HIPC Initiative. 7. Implementation of structural reforms has been satisfactory. In the trade area, maxi- mum import tariffs were reduced from 30 percent to 20 percent, and preparations are on track to lift the import bans on beer, soft drinks, and batteries effective April 1, 1998; this should make Uganda's trade regime one of the most open in sub-Saharan Africa. The capital account was liberalizedat the beginning of the program period. With a view to reducing the size of government and in light of decentralization,the civil service was further cut without compro- mising the level of staffing required to implement the UPE program; moreover, the govern- ment decided on a comprehensive restructuring plan that will significantlyreduce the number of ministries. In the financial sector, agreement was reached on the sale of the Uganda Commercial Bank and on the final recapitalization of the Bank of Uganda, the latter's supervision of commercial banks was strengthened, and commercialbanks engaged in greater provisioning and recapitalization.With regard to public enterprises, the Uganda Telecommu- nications Corporation was offered for sale, a license was awarded to a second national operator in telecommunications, and restructuring of the Uganda Electricity Board was undertaken, involving significantstaff retrenchment. Satisfactory progress was made under the privatization program. In the remainder of the fiscal year, the government intends to continue with its ambitious structural reform agenda. IDA-supported structural reforms 8. The SAC III supports continued reform in the areas of public expenditure manage- ment, revenue mobilizationand trade reform, parastatal reform, and the financial sector. Following successful fulfillment of conditionalitiesfor effectiveness, the first tranche of SAC III was released in October 1997, and satisfactory progress is being made for the latter tranches. A second tranche review is planned for summer 1998; no waiver of the SAC III conditions for HIPC assistance will be required. It is expected that the second tranche will be released on schedule, following the approval of the 1998/99 budget. The key issues that are focused on in the SAC III are detailed in Box 1.  -6- Box 1. Uganda: IDA-Supported Structural Reforms Reduce znaximumn import dutlyto 20percent and announce specific actions and timetableforfurther trade liberalizationto reduce anti-export bias. The maximum non-COMESAimport duty rate was lowered from 30 percent to 20 percent in June 1997. All remaining nontariffbarriers, with the exceptionof cigarettes,are lifted, effectiveApril 1, 1998. Increase budgetary allocation beginning in July 1997for agriculture research and extension,primary health, and primary education at least at the rate of increase of nominal GDP. Increases for the priorityareas noted abovein the 1997/98budget amounted to 26 percent. Most of the increases were in primary educationto support the universal primary education (UPE) initiative. and equalization budgetarygrants to districts and establish adequate monitoring Adopt rulesfor the conditionial programis. The Ministry of Finance has issued a circular setting out the frameworkfor the administrationof conditional grants. Under this framework,the line ministries in the strategic sectorsare to issue guidelines for the conditions, disbursement,and monitoring of these grants. To date, guidelines have been issued by the Ministries of Health, Local Government,and Education. The implementationof UPE is detailed under the IDA-fundedEducation Sector Adjustment Credit (ESAC). are needed-minimum In order to adopt rules for equalizationgrants, at least threemain pieces of inforrmation package of servicesto be deliveredin each priority sector, resourceflows to each district, including donor funding, and unit costs of service delivery.Owing to the complexityof the informationrequired for a thorough analysis when designing equalizationgrants, IDA has agreed with the governmenton a revised implementationplan. Work is under way to collect and assess the required infomiation. Design and begin implementing an actionplan to improvefinancial accounting and auditingfor central and publication and dissemination of district local governments. Make necessary arrangements to begin timzely budgets, Local Government PublicAccounts Conmmiittee Reports, and audits of district accounts. In the context of the SecondEconomicand FinancialManagementProject, the governmentand IDA have agreed to a program for strengtheningthe accountingand accountabilityprocesseswhich include, inter alia, strengthening financialmanagementskills and informationsystems.Implementationof this program is commencingwith the specificationof the informationsystemrequirements.This in tum will result in acquisitionof appropriate informationsystems. Similarly,detailed staff developmentplans are under developmentfor addressingcritical shortagesin staffing skills in financialmanagement. The DecentralizationSecretariatof the Ministry of LocalGovemmenthas been assembling and publishing district budgets since 1996/97. A letter dated 21 May 1997 from the AuditorGeneral's officeto the Ministry of Finance and a letter dated June 16, 1997from the Acting Directorof Audit to the PenmanentSecretaryof the Ministry of Finance outline the records and accounts. Releases of conditionaland responsibilityand timetablefor audits of local govenmment unconditionalgrants are now publishedby the press. Complete sale of the UgandaCommercialBank (UCB) and implementpolicy regarding the UgandaDevelop- ment Bank (UDB) to stop losses and minimize budgetary costs. Agreement was reached on the sale of forty-ninepercent of UCB shares with an option for an additional 2 percent to a privateforeign investor. A business plan has been drawn up for UDB to eliminatedirect govenmment subsidies.  -7 - The medium-term program 9. Uganda's ongoing reform strategy focuses on poverty alleviationand sustainable growth by maintaining macroeconomic stability,liberalizingand diversifyingthe economy, increasing private sector participation, and improving the efficiency and impact of its poverty programs. The balance of payments and external debt are discussed in Section III below in the context of the DSA. In the fiscal area, the strategy is to bring about a gradual but sustained reduction in the overall fiscal deficit (on a commitment basis, excluding grants). Toward this end, the remaining reform agenda places high priority on developing a sustainable domestic resource base through steady increases in revenues as a proportion of GDP. This is to be achieved by improving tax and customs administration, broadening the tax base, and restruc- turing the tax system so as to rely less on excise taxes on petroleum and other products and import tariffs, and more on the VAT and income taxes. Assistance under the HIPC Initiative will release resources that the government intends to devote to meeting the country's increasing requirements for expenditures in the social sectors (especially health and educa- tion). The launching of the UPE program is a manifestation of this approach. Other expendi- ture priorities would be to develop the country's physical infrastructure and power facilities. The medium-term fiscal profile envisages continued but reduced reliance on external donor (aid) support, but it does not envisage further exceptional financing. 10. Structural reforms in the medium term will be geared to completing the agenda on trade liberalization, civil service restructuring, and the privatization program. Financial sector reform has been virtually completed, but there will be a need for continuous improvement in bank supervision and oversight. Further progress is envisaged in restructuring those public utilities (for example, power and railways)that will remain in the public sector. There will also be a continuing need to build up technical and administrativecapacity, the statistical base, and the legal and judicial frameworks. There have been encouraging developments with regard to governance, as reflected in the strengthening of the Office of the Inspector General of Government, the increase in the number of investigations and prosecutions, proposals to strengthen the leadership code, and generally a more open attitude within official and private circles to the discussion of governance issues. Strengthening public accountability, particularly at the district level, will need to be continuously pursued in the medium term. 11. The authorities are committed to implementing a prudent external debt strategy- seeking grant financingto the maximum extent possible, limiting new concessional borrowing to IDA, or better, terms with a strict annual cap (US$10 million)on nonconcessional borrowing for use on a very exceptional basis. In addition, significant attention is paid in integrating external debt management into the formulation of macroeconomic policy, as well as in developing technical expertise through the updating of the DSA projections. Reports on external debt developments are made regularly to the macroeconomic management team in the Ministry of Finance, as well as forming part of the regular discussions with donors.  -8- B. Social Reforms 12. To address poverty and poor social conditions, the government adopted in June 1997 the Poverty Eradication Action Plan and is now finalizinga strategy for its implementation. The plan emphasizes maintaining a policy of macroeconomic stability, together with measures to increase incomes and improve the quality of life of the poor through, inter alia, developing rural infrastructure, promoting small and micro enterprises, increasing job creation, and improving health services and education. 13. Under the ESAF-supported program, increased emphasis has been placed on expendi- tures in the social areas. The benchmark for December 1997 on minimumnonwage priority expenditures on health and education was achieved. Monitoring of social output indicators also form part of the program; these focus on annual targets for net primary school enrollment and completion rates, primary school gender ratio, immunization of children and pregnant women, as well as access to clean water (Table 1). 14. A major focus of IDA's work has been in education. The government's implementa- tion of the UPE program resulted in a dramatic increase of primary school enrollment, which was estimated at 5.3 millionin August 1997. The government's Letter of Education Sector Policy dated February 12, 1998 sets out the government's strategy for the education sector, including the definition of a minimumpackage of government services centered on the provision of universal primary education. Funding for the UPE initiative increased by 37 percent in the 1997/98 budget and included a wage bill contingency to finance an increase of primary school teachers. The proposed ESAC supports the UPE effort and contains conditionalities to ensure improved planning, funding, and monitoring of primary education program. 15. A number of surveys and studies have been carried out in the health sector over the past few years, directed at providing the basis for improving health services. In 1995, a baseline National Service Delivery Survey was undertaken to collect data on key services, including health, in order to improve the efficiencyof public services. Household surveys collect and analyze socioeconomic statistics. The World Bank carried out a study which tracked public expenditure in the health sector in 1996. One of the more important findings of the study was that, while government expenditures increased in the social sectors, the amounts received by schools and clinics were much less. As a result of this study, a more transparent process of the transfer of public funds from the center to the service facilities has been instituted. A minimumhealth package has been defined at the various local levels, and is detailed in a Ministry of Health document entitled "Towards Defining and Costing a Basic Package of Health Services for Uganda." Moreover, the Ministry of Health is drafting a Five- Year Health Plan Framework that defines basic services and a timetable for their implementation.  -9- 16. The government has recognized the need for an effective monitoring system of public spending on health and education at the district level, including service delivery surveys. In this regard, the government, through donor funding, carried out the National Service Delivery Survey and a district-based statistics project focusing primarilyon the social sectors. The IDA-financed Second Economic and FinancialManagement Project (EFMP II) will finance the implementation of a common financial management system to be used by the central and local governments. 17. Micro-financial institutions and rural financialintermediaries are crucial for addressing the needs of small savers and borrowers. A report entitled "First Draft Report of the Technical Committee for Coordination of Micro-financingInitiatives in Uganda" dated December 1997 summarizes the current situation and puts forward recommendations for coordinating micro financing initiatives in Uganda, includingthe establishment of a policy board, capacity building, regulatory framework, appropriate mechanisms for credit delivery, and the incentive structure. A major conference on micro-finance, supported by the Economic Development Institute and other donor agencies and engaging a range of international actors, is scheduled for May 1998. III. NPV CALCULATIONFOR END-JuNE 1997 ANDDEBTSUSTAINABILITY ANALYSIS 18. At Uganda's decision point in April 1997, a target of 202 percent (plus or minus 10 percentage points) was agreed for the NPV of debt-to-exports ratio (based on end-June 1997 actual data, the latest available before the completion point) after assistance under the HIPC Initiative. This section describes the outcome of the updated NPV calculations, including the actual NPV of debt-to-exports ratio as compared with the agreed target range, and summarizes the updated DSA. A. NPV of Debt-to-Exports Ratio for End-June 1997 19. The NPV of debt disbursed as at end-June 1997 was calculated on a loan-by-loan basis, using end-period exchange rates and updated currency-specific discount rates (six-month-average commercial interest reference rates (CIRRs), ending June 1997), and after applying at least comparable terms on eligible debt to non-Paris Club creditors as those granted by Paris Club creditors under the 1995 stock-of-debt operation. The export denomi- nator was also updated using actual data for the three-year average (ending June 1997) of exports of goods and nonfactor services. Before assistance under the HIPC Initiative, the NPV of debt-to-exports ratio at end-June 1997 stood at 243 percent. The NPV of debt after HIPC assistance indicates an NPV of debt-to-exports ratio of 196 percent, about 6 per- centage points lower than projected in the HIPC decision point document but still well within the agreed target range of 192-212 percent (Table 2). Details on the amount and delivery profile of assistance are discussed in Section IV.  - 10- 20. The lower NPV ratio-compared with the projection for end-June 1997 included in the HIPC decision point document-reflects a number of partly offsetting, but largely exogenous factors. Factors reducing the NPV ratio included: actual export performance (based on a three-year average ending June 1997) was better than projected relative to that included in the HIPC decision point document by about 4 percent 6 ; the U.S. dollar was stronger vis-a-vis most other currencies at end-June 1997 as compared with end-June 1996 (lowering the U.S. dollar value of debt-service flows denominated in most other currencies); the U.S. dollar discount rate (six-month-average CIRR, ending June 1997) was 0.4 percentage points higher relative to that used in the NPV calculations on U.S. dollar denominated external debt presented in the HIPC decision point document, which were based on the six- month-average U.S. dollar CIRR, ending June 1996; and, as a result of the data reconciliation exercise, arrears on public enterprise debt reassigned to private entities following privatiza- tion/restitution were taken off the stock of public and publicly guaranteed debt as at end-June 1997. Factors increasing the NPV ratio included: the SDR discount rate (six-month-average CIRR, ending June 1997) was 0.2 percentage points lower relative to that used in the NPV calculations on SDR-denominated external debt presented in the HIPC decision point document, which were based on the SDR six-month-average CIRR, ending June 1996; and, remaining arrears as at end-June 1997 were higher than projected in the final HIPC document, reflecting debt reconciliation and interest accumulated on arrears over 1996/97. B. Summary of Debt Sustainability Analysis 21. An updated DSA was prepared jointly by the staffs of the World Bank and the Fund with the authorities. The agreed balance of payments projections assume a continuation of adjustment policies, a return to more normal weather conditions, and a generally favorable external environment. The main assumptions of the 20-year scenario are described in Box 2, and the results in Table 3. With the exception of incorporating working estimates of the cash-flow implications of the HIPC Initiative, as described below, no major changes have been made to the underlying assumptions of the DSA that was included in the HIPC decision point document. The medium-term balance of payments projections and macroeconomic framework discussed with the authorities are based on the working cash-flow estimates of HIPC assistance of US$30 millionannually, which reflected indications available in February 1998 6 Merchandiseexports in 1996/97 were about 14 percent higher than projected, reflecting mainly higher coffee export volumes (4.4 millionkg. bags as compared with 4 million expected). However, this was a year of high coffee exports resulting from sharp increases in coffee production, owing to the impact of structural reforms and good weather. Exports of goods in 1997/98 are projected to decline by 23 percent (19 percent lower than programmed), owing to the unexpected effects of"El Nino."  - 11 - from creditors of the delivery profile of assistance. Since then, the disbursement profile of HIPC assistance has been revised upward for the first five years by US$8-1 0 millionannually (in the range of 0.1- 0.2 percent of GDP), owing to front-loading of the assistance from IDA. The authorities have indicated that HIPC assistance would be allocated toward social sector spending. The additional HIPC assistance could be accommodated within the medium-term fiscal program consistent with the inflation objective; it could involve a slight increase in the overall fiscal deficit (excluding grants) over the period, and may also involve a slightly higher external reserve accumulation. The medium-term framework will be updated again with the authorities during the forthcoming mission to update the Policy Framework Paper (PFP) in the summer. 22. The main conclusion of the DSA is that, with assistance under the HIPC Initiative, Uganda's debt situation would become sustainable and Uganda would exit from the debt-rescheduling process. The scenario assumes that gross international reserves would accumulate to 4.9 months of imports of goods and nonfactor services by 1998/99 from 4.6 months in 1996/97. Thereafter, they would remain at around 4 months through 2016/17. The economy is expected to become more diversified over time (noncoffee exports would constitute more than two-thirds of total merchandise exports by 2016/17 compared with one-third in 1995/96). As regards the debt indicators, the NPV of debt-to-exports ratio (with exports calculated as a three-year average) would decline from 243 percent in 1996/97 to 196 percent following the delivery of assistance under the HIPC Initiative; 7 it would remain firmlybelow 200 percent from 2001/02 onward. Based on current-year exports, the NPV ratio would fall below 200 percent by 1998/99. The debt-service ratio (before HIPC assis- tance) would decline from about 27 percent in 1997/98 to below 21 percent in 1998/99, and fall to about 9 percent at the end of the period. The debt-service ratio (after HIPC assistance) would fall to about 17 percent in 1998/99 and to about 13 percent by 2000/01, and remain about or below 10 percent thereafter. 7 The NPV of debt-to-exports ratio rises in 1997/98-1999/00 because of the impact of the temporary sharp decline in exports in 1997/98 on the export denominator, which is based on a three-year average. As exports recover, the NPV of debt-to-exports ratio resumes a declining trend.  - 12 - Box 2. Uganda: AssumptionsUsed in the Debt SustainabilityAnalysis (DSA) * An annual averagereal GDP growth of 5 percent is projected in 1997/98, 7 percent in 1998/99-2000/01, and 5 percent thereafter. * An average real export growth of 5.1 percent a year is projectedthroughoutthe projectionperiod. Following the sharp, weather-induced, drop in 1997/98,noncoffeeexports are projected to rebound through 1998/99-2000/01and then to grow on averageby 9 percent in real terms per annum onward; prices are assumned to increasebroadly in line with world inflation. Coffeeexports are projected to grow in volumeterms by about 2 percent annum from 1999/2000,followinga projectedrecoveryin 1998/99. Coffeeprices are projected to rise to US$ 1.49per kg in 1997/98,declineto US$1.4 per kg in 1998/99-1999/2000,and to remainconstant in real terms thereafter. . Imnport growth is projectedto rise overthe period by close to the growth rate of real GDP. The income elasticityof imports is assumed to be 0.9 in 1997/98and 0.95 thereafter. . Follow the sharp rise in estimatedprivate transfers in 1997/98,privatetransfers are assumed to grow on average by about 4 percent in real tenns. Most of these transfers are assumed to constitute foreigndirect investmentand other capital flows,which Ugatndais assumiied to continue to attract in the future. * Inflows of donors assistanceare projectedto grow by about 9.4 percent in 1997/98,and to remain broadly constant in real terms thereafter;such assistanceis projected to declinegradually from 10percent of GDP to less than 4 percent at the end of the projectionperiod. General balance of payments support is assumed to be phased out by 2006/07. . New financing(i.e., financingabove the amountsalready committedbefore end-June 1997) is expected to continueto be higlhly concessional,with 80 percent assumed to be contracted on IDA tenns (40-year maturity with a 10-yeargrace period at an interest rate of 3/4 of I percent), and the remaining 20 percent on less favorablebut still highly concessionaltenns (23-yearmaturitywith a 6-year grace period, at 2 percent interest). * Followingthe stock-of-debtoperation(Naples terms) with Paris Club creditorsin February 1995, the projectionsassume that non-ParisClub bilateral and comnmercial creditors provide debt restructuringon at least comparable tenns. In additionto assistanceunder these traditional debt mechanisms,the projectionsincorporatea profile of the additional cash-flowassistance under the HIPC Initiative of about US$30 million to US$22 millionper annum (see section IV). IV. ASSISTANCE UNDER THE HIPC INTIATIVE A. Status of Creditor Participation 23. The assistance from the Fund and IDA committed to Uganda at the decision point under the HIPC Initiative is conditional, inter alia, on satisfactory assurances of commensurate action by Uganda's other creditors. Multilateral creditors 24. Uganda's multilateral creditors have confirmed that, at the completion point, they will provide assistance to reduce the NPV of their claims in accordance with the decision taken by the Boards of the IDA and the Fund at the decision point (see Box 3). All arrears to  - 13 - multilateral creditors have been cleared either in cash payments or rescheduled on a 8 concessional basis as part of those institutions' participation in the Initiative. Box 3. Uganda: StylizedAssumptionsfor Debt Relief from MDBs As a follow-upto the meeting of multilateraldevelopmentbanks (MDBs)held on March 2-3, 1998, the following list of stylizedassumptions describehow the MDBs plan to delivertheir debt relief to Uganda. IDA HIPC Trust Fund Grant representingthe first tranche of the proposedESAC Repurchase of IDA debt, starting with the oldest credits outstanding. Servicinga portionof debt serviceowed to IDA. IMF ESAF/HIPCTrust Grant deposited into an escrow accountin the name of the governmentto be used to meet Uganda's debt serviceto the Fund under an agreed schedule. Assistance to be slightly front loaded and spread over the life of current obligations. AfDB/AfDF HIPC Trust Fund Funds will likelybe used to repurchaseAfDB debt, which is the least concessional.Five of the six loans will be repurchasedcompletely,and the sixth will be repurchasedpartially. EIB/EDF The EU will likelyuse an internal sourceof funds to prepay EDF Special loans. IFAD IFAD has approved a self-administeredfacility,which would provide debt servicerelief to Uganda. IsDB The IsDB will likelyuse a concessionalreschedulingby extendingthe repaymentperiod. NDF HIPC Trust Fund Contributionwill cover 100 percent of debt service to the NDF as it falls due until the contribu- tion is exhausted. BADEA To provide a concessionalreschedulingof arrears (10 year maturitywith two years grace at zero interest). OPEC Fund Proposesto provideUganda with a US$5 millionbalance-of-paymentsloan with an NPV of US$3 millionat the completionpoint. EADB During the final data reconciliationprocess, it was learned that the claims of these two creditors and on private borrowersare guaranteedby the Ugandan government.These creditorshave been PTA Bank contactedto request their participationin the Initiativefor Uganda. Their combined claims account for less than 0.5 percent of the totalNPV debt at end-June 1997. s During the final reconciliation process, it was learned that the claims of two African-based multilateral creditors (EADB and PTA Bank) on private borrowers are in fact guaranteed by the Ugandan government and therefore subject to action under the HIPC Initiative. These creditors have been contacted to request their participation. Their combined claims in Uganda account for less than 0.5 percent of the total NPV of debt at end-June 1977. Their assistance under the HIPC Initiative together would amount to about US$1.6 millionin NPV terms.  - 14 - Bilateral creditors 25. Paris Club creditors agreed at their March 5, 1998 meeting to top up Uganda's Naples terms stock-of-debt operation to Lyon terms (80 percent NPV reduction), once Uganda reaches its completion point under the HIPC Initiative. They also agreed that the coverage of this stock-of-debt operation should be comprehensive, including the debt rescheduled on London terms, on the assumption that this is needed, in the context of equitable burden sharing, to provide their contribution to the agreed assistance. 26. Regarding the rescheduling of Uganda's arrears and current maturities with non-Paris Club bilateral creditors, the authorities have contacted these creditors with a view to receiving terms at least comparable to those granted by Paris Club creditors (on Naples terms), and now the Lyon terms that the Paris Club has agreed to implement soon. An agreed minute was reached with Tanzania on the settlement of Uganda's arrears at a significant discount; however, agreements have yet to be reached with the remaining bilateral creditors. 9 B. Amounts and Delivery Profile of Assistance 27. The amount of assistance under the HIPC Initiative for Uganda at the completion point has been updated; it is now estimated at US$347 nmillion in NPV terms (which is comparable to the US$338 millionestimated at the decision point given updated exchange rates and discount rates), comprising multilateral contributions of US$274 million and bilateral contributions of US$73 million.' 0 "Consistent with proportional burden sharing as projected at the decision point, the estimated amount of assistance is based on multilateral creditors providing the equivalent of 21 percent of the NPV of their claims outstanding as at end-June 1996, Paris Club creditors topping up all eligibledebt to Lyon terms involving an 80 percent 9 Uganda has made efforts to reach settlement on remaining arrears to the Abu Dhabi Fund, China, India, Iraq, Libya, Pakistan, Burundi, Democratic People's Republic of Korea, Nigeria, and some commercial creditors. "0 For multilateral creditors, their overall contribution is equivalent to 20 percent of their claims (in NPV terms) outstanding at end-June 1997; the bilateral creditors' contribution is equivalent to 18 percent of their claims (in NPV terms) outstanding at end-June 1997. The changes in the relative shares reflect actual versus projected disbursements between the decision and completion points as well as the use of updated exchange rates and discount rates. "The nominal debt service covered by HIPC assistance is estimated at around US$650 million.  - 15 - NPV reduction, and other bilateraland commercial creditors providingassistanceon terms comparableto those of Paris Club creditors.The resultingNPV of debt-to-exportsratio, after HIPC assistance,would stand at 196 percent. 28. Uganda's projecteddebt-serviceratios are generallybelow 20 percent prior to HIPC assistanceexcept in 1997/98,whenthe ratio is projectedto rise, owing to the temporary declinein exports. In these circumstances, the deliveryprofile of assistancewould not need to be tailoredto achievea specificreductionin the debt-serviceratios.The staffs of the Fund and IDA derivedworking estimatesof the overallcash-flowimplicationsof creditors' deliveryof HIPC assistanceand incorporatedthem in the DSA. Significant cash-flowreliefis expectedto begin only in 1998/99and would amountto about US$30 millionannuallythrough 2006/07 and to about US$22 millionannuallyover the remainderof the 20-yearbalanceof payments projections(Table3). As the specificmodalitiesto be employedby some multilateralcreditors to generatethe targeted debtrelief still needto be finalized,these cash-flowestimatesshould be consideredonly as illustrative. 29. The assistanceto be providedby IDA amountsto US$160 millionin NPV terms (Table4). This assistancewillbe deliveredthrough three instruments:(i) a grant to be approvedduringthe interimperiod (US$75 millionin nominalterms or US$24 millionin NPV terms),which is the first tranche of the proposed ESAC scheduledto be disbursedin May 1998;(ii) purchaseand cancellation by the HIPC Trust Fund of outstandingIDA credits (US$181 millionin principaland US$23 millionin interestor US$84 millionin NPV terms); and (iii) servicingby the HIPC Trust Fund of a portionof IDA creditsthrough earmarking US$52 millionin NPV terms in the HIPC Trust Funduntil these resources,includinginterest earned, are exhausted.'2 The total debt servicereliefin nominalterms through these mecha- nismswillamount to approximately US$354 million.IDA's assistanceunder the HIPC Initiativewould average US$18 millionper annumduring the first fiveyears and US$8 million per annumuntil 2036/37. 30. The Fund's assistanceof the SDR equivalentto US$68.9 millionwould take the form of a grant depositedin an escrow account in the name of the governmentto be used to meet Uganda's debt serviceto the Fundunder an agreed schedule.Interest earned would accrue to the escrow account. Consistentwith the general principlesestablishedby the IMEExecutive Board at Uganda's decisionpoint,namely,the assistanceshouldbe slightlyfront loaded and spread over the life of current obligationsto the Fund, a profilefor drawingdown this account in terms of percentagesof the amountdepositedhas been agreed with the authorities (Table 5). The Fund's assistanceis currentlyestimatedto amountto about US$16 millionin 1998/99beforedecliningto about US$9-US$1l millionthrough 1999/2000to 2002/03 and tapering off to about US$3 millionby 2006/07. 12Owing to the particularstructureof Uganda's debt to IDA, a decisionwas made to include debt servicingas part of IDA's assistance.BecauseIDA's assistancewill now come earlier than outlined at the decisionpoint, owingto the inclusionof paymentof debt service,the nominaldebt servicereliefis lessthan the US$430 millionenvisagedin the decisionpoint document,althoughin NPV termsit remainsat US$160 million.  - 16 - 31. The African Development Bank and Fund (AfDB/F) will participate in the HIPC Initiative through the HIPC Trust Fund by buying back most of the AfDB (nonconcessional) loans with its own contribution, as well as through donor contributions. The Nordic Develop- ment Fund (NDF) will also participate through the HIPC Trust Fund by paying debt service falling due on behalf of the debtor rather than through a debt buyback. The Arab Bank for Economic Development in Africa (BADEA) has agreed with the Ugandan authorities to provide its HIPC assistance through a concessional rescheduling of arrears, over ten years with two years grace at zero interest. For the remaining multilateral creditors, which have not provided specific modalities, it has been assumed that either grants or concessional reschedulings would be used to deliver the required debt relief in NPV terms. V. CONCLUSIONS 32. The staffs of the Fund and IDA are of the view that Uganda's economic performance under the ESAF and under SAC III has been satisfactory. The NPV of debt-to-exports ratio based on actual data for end-June 1997 is calculated at 196 percent, well within the target range of 202 percent plus or minus 10 percentage points. Multilateral creditors and the Paris Club, comprising the bulk of Uganda's debt, have provided satisfactory assurances of their participation in the HIPC Initiative for Uganda. Uganda has made strong efforts to settle remaining arrears to other bilateral creditors. Accordingly, the staffs of the Fund and the IDA recommend that Executive Directors agree that the conditions for reaching Uganda's completion point under the HIPC Initiative have been fulfilled.  Table 1. Uganda:SocialOutcomeIndicators,1994/95-2004/05 (In percent) 1994/95 1995/96 1996/97 1997/98 1998/99 1999/2000 2004/05 Est. Proj. Target Net primaryeducationenrollmentrate 1/ 55 56 83 85 90 95 100 Primaryschoolcompletionrate 2/ 30 35 37 40 45 50 60 Genderratio(primaryschool)3/ 45 46 47 48 49 50 50 Immunizationrates: Children4/ 47 50 55 60 65 70 80 Pregnant w:'omen5/ 80 83 86 89 92 95 95 6/ Accessto clean %vater 37 38 39 45 50 55 75 I/ Ratio of net enrollmentto cohort(i.e., enrollmentwithincohort limits).Data for 1996/97are basedon February1997data. Ministryof Education. 2/ Ratio of numberof studentscompletingP7 to numberenrolledin P1 sevenyearsearlier. Data for 1996/97are basedon February1997enrollmentfigures.Ministryof Education. 3/ Ratioof girlsto total pupils enrolledin primaryschool;Ministryof Education. 4 Immunization of six antigensof the ExpandedProgramme on Immunization; ratio derivedfromcoverage surveyon infantsaged 12to 23 months.Ministryof Health (UNEPI). 5/Immunization of pregnantwomenfor full protectionof childrenagainstneonataltetanus; ratio derivedfromsurveysof %vomen whohave childrenbelow 11monthsof ageand produceevidenceof havinghad required immunizations. Ministryof Health (UNEPI). 6/ Ratio of numberof peopleservedby protectedsourcesof wvaterto total populationin ruralareas; Ministryof NaturalResources, Directorateof Water Development.  - 18- Table2. Uganda:NPV of Debt and NPVofDebt-to-Exports Ratio,End-June 199 (In millionsof U.S. dollars,unless otherwisenoted) 1997 End-June TotalNPV of debt 1,796 Multilateral 1,357 IDA 790 IMF 323 AfDF 101 AfIB 35 Othermultilaterals 108 BADEA2/ 16 Europeam InvestmentBank 28 EU Development Fund 4 IFAD 26 IslamicDevelopment Bank 11 NordicDevelopment Fund 6 OPECFund 8 EADB 4 PTA 4 Bilateral 398 Paris Club 240 debt Post-cutoff-date 102 debt Pre-cutoff-date 138 Non-ParisClub 146 Post-cutoff-datedebt 89 Pre-cutoff-datedebt 57 Other 12 Arrears 3/ 41 ratio beforeassistance NPV of debt-to-exports (in percent) 243 HIIPC assistance (in millionsof dollars) 347 ratio after assistance NPV of debt-to-exports (in percent) 196 Memorandum item: Exportsof goodsand nonfactorservices4/ 739 authorities;and WorldBank and Fund staffestimates. Sources:Ugandani 1/ Usingthe six-month averageCIRRsendingJune 1997and end-June 1997 exchangerates. 2/ IncludesUS$10.6millionin arrears to be subjectto a concessional rescheduling as part of BADEA'scontributionunderthe HIPCInitiative. 3/ AfterJune 1997,US$4.9millionin arrears to multilateralcreditorswere cleared throughcash payments.The remainingarrears are to bilateralcreditorsfor whichthe authoritieshave soughtcomparable tenns to those offeredby Paris Club creditors. 4/ Three-yearaverage.  - 19- Tablc 3. Uganda: Balance of Payments, 1994/95-2004/05 (In millions of U.S. dollars, unless otierwise indicated) 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 Prog. Proj. Projections Current account -141.6 -110.0 -53.4 -145.5 -162.9 -191.3 -227.6 -252.3 -257.0 -262.4 -257.7 -241.4 Trade balance -490.2 -627.9 -575.4 -724.1 -815.0 -842.9 -918.8 -993.5 -1,053.9 -1,117.7 -1,183.6 -1,253.1 Exports, f.o.b. 595.3 590.3 670.9 642.8 519.7 597.1 652.2 717.2 774.0 835.3 903.1 976.4 Coffee 456.6 404.4 365.6 315.9 301.7 336.0 352.8 377.4 402.4 428.3 455.1 473.5 Noncoffee 138.7 185.9 305.2 326.9 218.0 261.1 299.4 339.9 371.6 407.0 448.0 503.0 Imports, c.i.f 1,085.5 1,218.3 1,246.3 1,367.0 1,334.7 1,440.0 1,571.1 1,710.8 1,827.9 1,953.0 2,086.7 2,229.5 Project-related 230.0 211.4 209.5 226.9 226.9 231.4 260.2 284.4 302.0 317.5 340.2 361.4 Other imports 855.5 1,006.8 1,036.8 1,140.1 1,107.8 1,208.6 1,310.9 1,426.4 1,525.8 1,635.5 1,746.5 1,868.1 Nonfactor services -226.0 -247.3 -251.0 -257.4 -258.3 -258.3 -272.4 -285.8 -298.0 -308.9 -319.7 -321.4 Net interest -33.7 -32.6 -6.1 -3.0 -7.2 -0.8 5.4 8.3 17.2 17.3 16.8 15.3 Private transfers 329.9 534.5 482.1 522.5 597.0 617.5 660.1 707.7 757.9 815.6 881.8 957.9 Of which: identified FDI ... 113.4 160.0 193.0 190.0 230.0 251.8 275.0 294.6 315.5 337.9 361.9 Ofwhich: NGOs ... 81.8 85.9 87.8 90.2 92.0 103.5 113.1 120.1 126.2 135.3 143.7 Official transfers 302.7 276.6 307.4 329.1 329.1 306.4 316.6 332.9 346.3 360.3 378.6 393.9 Import support 1/ 95.7 86.3 118.8 124.9 124.9 75.0 70.0 60.0 50.0 40.0 30.0 20.0 Project support 207.0 190.3 188.6 204.2 204.2 231.4 246.6 272.9 296.3 320.3 348.6 373.9 Other -24.4 -13.2 -10.4 -12.6 -8.6 -13.1 -18.4 -21.9 -26.5 -29.0 -31.7 -34.0 Capital account 258.9 144.6 154.7 189.7 207.1 240.8 252.9 256.2 270.3 274.0 263.2 273.3 Official (net) 281.8 210.2 209.5 222.4 207.1 240.8 252.9 256.2 270.3 274.0 263.2 273.3 Disbursements 377.4 282.4 276.4 309.6 309.6 326.4 333.9 340.9 347.7 354.7 361.8 369.0 Inmport support 124.4 49.9 45.9 60.0 60.0 95.0 60.0 45.0 40.0 40.0 30.0 20.0 Project support 252.9 232.6 230.5 249.6 249.6 231.4 273.9 295.9 307.7 314.7 331.S 349.0 Amortization due -95.6 -72.3 -66.9 -87.1 -102.5 -85.5 -81.0 -84.7 -77.4 -80.7 -98.6 -95.7 Private capital (net) 2/ -22.9 -65.6 -54.7 -32.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Overallbalance 117.3 34.6 101.3 44.2 44.2 49.6 25.3 3.9 13.4 11.6 5.5 31.9 Financing -117.3 -34.6 -101.3 -44.2 -44.2 -49.6 -25.3 -3.9 -13.4 -11.6 -5.5 -31.9 From monetary authorities -146.9 -73.0 -137.5 -71.1 -70.8 -103.7 -79.8 -57.5 -64.6 -57.3 -51.3 -65.9 Gross reserve change -168.9 -91.5 -147.5 -66.0 -65.8 -90.7 -65.6 -9.1 -21.5 -12.7 1.1 -12.5 IMF (net) 22.5 18.5 10.0 -5.1 -5.1 -13.0 -14.2 -48.4 -43.1 -44.5 -52.5 -53.4 Short-temi -0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Change in arrears (net) 14.2 20.4 16.2 -316.1 -271.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Exceptional financing 3/ 15.4 17.9 20.0 343.0 297.9 54.1 54.5 53.6 51.2 45.7 45.9 34.0 Toward arrears reduction 0.0 8.9 0.0 316.1 271.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Current maturities 15.4 9.0 20.0 26.9 26.4 24.1 24.5 23.6 21.1 15.9 15.2 3.3 HIPC assistance 0.0 0.0 0.0 0.0 0.0 30.0 30.0 30.0 30.1 29.8 30.6 30.7 Financing gap 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Memorandum items: Gross international reserves 4/ 3.4 3.6 4.6 4.6 4.7 4.9 4.9 4.5 4.4 4.1 3.9 3.7 Net international reserves 4/ -0.4 0.4 1.5 1.9 2.0 2.5 2.7 2.8 2.9 3.0 3.1 3.1 Current account-to-GDP ratio (in percent) Including official transfers -2.7 -2.0 -0.9 -2.2 -2.6 -2.7 -2.8 -2.9 -2.7 -2.6 -2.4 -2.1 Excluding official transfers -8.4 -6.9 -6.1 -7.0 -7.7 -6.9 -6.8 -6.7 -6.4 -6.2 -5.9 -5.5 Excluding official transfers and FDI 5/ ... -9.0 -8.7 -9.9 -10.7 -10.2 -9.9 -9.8 -9.5 -9.3 -9.0 -8.6 Debt-service ratio 6/ Beforerescheduling(includinglMF) 25.8 23.1 20.4 23.9 30.7 24.1 20.4 18.6 15.2 14.6 15.6 14.3 After rescheduling (including IMF) 3/ 23.5 21.8 17.9 20.6 26.9 21.2 17.6 16.2 13.3 13.3 14.4 14.1 After HIPC 23.5 21.8 17.9 20.6 26.9 17.4 14.3 13.2 10.5 10.7 12.0 11.9 NPV of debt before H[PC (including lMF) 1,699.3 1,727.0 1,795.9 1,878.5 1,811.4 1,904.0 1,996.5 2,096.5 2,205.7 2,311.7 2,419.4 2,531.4 NPV of debt after HIPC (including lMF) 3/ ... ... 1,448.9 ... 1,510.3 1,608.2 1,711.7 1,823.5 1,943.5 2,061.6 2,182.6 2,305.8 NPV of debt/exporls ratio (before HIPC; in percent) Current-year exports 254.7 238.0 217.7 229.6 258.4 224.4 213.2 201.6 195.4 189.7 183.0 175.2 Tlsree-yearexportaverage 411.8 300.2 243.0 238.1 242.0 245.5 250.1 233.8 223.8 215.0 207.4 199.5 NPV of debtlexports ratio (after HlPC; in percent) Current-year exports ... ... ... ... 217.3 199.3 191.7 184.1 181.2 177.3 172.8 167.0 Three-yearexport average ... ... 196.0 ... 201.8 207.3 214.4 203.3 197.2 191.7 187.1 181.7 Coffeeprice(in U.S. centsperkg) 257.0 172.1 138.2 130.0 149.0 140.0 140.0 142.9 145.8 148.7 151.7 154.7 Exports of goods, and nonfactorservices 7/ 412.7 575.3 739.2 842.0 748.5 775.6 798.4 896.9 985.5 1,075.3 1,166.3 1,269.0 Sources: Ugandan authorities, and Fund and World Bank staffestiniates and projections. 1/ Excludes possible additional BOP support of about USS35 million in 1997/98. 21 Includes private short-term capital flows, foreign direct investnment,and errors and omissions. 3/ For 1996/97 and beyond, incorporates effects of Paris Club stock-of-debt operation and assumes resclseduliiig will non-Paris Club bilateral and conunercial creditors on terms viewed by the authorities as comparable. 4/ In montlds of iniports of goods and nonfactor services. 5/ Tlle authorities have made preliminary estimates of the foreign direct investnsent consponent of private transfers for 1995/96. These estimates are currently being refined based on the recommendations of tle recent STA tecinical assistance niission, and aithough prelinsinary, the available infornnation does provide a better basis for projecting the evolution of private transfers. 6/ In percent of current-year exports of goods and nonfactor services. 7/ Three-year average  -20 - Table 3 (concluded). Uganda: Balance of Payments, 2005/06-2016/17 (In millions of U.S. dollars, unless othierwiseindicated) 2005106 2006107 2007/08 2008109 2009110 20010/11 2011/12 2012V13 2013114 2014/15 2015/16 2016/17 Projections Ctrmentaecount -220.1 -196.1 -167.3 -131.9 -88.4 -81.6 -103.6 -128.1 -154.8 -183.3 -216.1 -247.2 Trade balance -1,326.4 -1,403.7 -1,485.2 -1,571.2 -1,661.7 -1,755.6 -1,854.2 -1,957.9 -2,066.9 -2,181.3 -2,294.4 -2,412.4 Expots, f.o.b. 1,055.7 1,141.4 1,234.1 1,334.3 1,442.7 1,559.8 1,686.5 1,823.4 1,971.5 2,131.6 2,304.7 2,491.8 Coffee 492.6 512.5 533.2 554.7 577.1 600.5 624.7 649.9 676.2 703.5 731.9 761.5 Noncoffee 563.1 629.0 700.9 779.6 865.5 959.4 1,061.8 1,173.5 1,295.3 1,428.0 1,572.7 1,730.3 hupost, Ci.f 2,382.1 2,545.1 2,719.4 2,905.5 3,104.4 3,315.4 3,540.7 3,781.4 4,038.4 4,312.8 4,599.0 4,904.2 Projeet-related 383.1 403.0 413.2 423.7 434.5 443.2 452.0 461.7 471.8 482.2 492.8 503.6 Other impors 1,999.0 2,142.1 2,306.1 2,481.8 2,669.9 2,872.2 3,088.7 3,319.6 3,566.5 3,830.6 4,106.3 4,400.6 Nornfaetor ervices -321.8 -320.0 -313.4 -304.9 -294.1 -279.6 -262.4 -242.1 -218.3 -190.7 -156.8 -117.8 Net interest 14.1 14.1 16.0 19.3 24.9 33.0 41.3 47.9 52.5 55.7 56.0 56.9 Private tanfers 1,040.6 1,130.4 1,222.2 1,321.4 1,428.7 1,501.0 1,546.4 1,593.1 1,641.2 1,690.7 1,731.5 1,773.1 Ofwhieh: identified FDI 387.6 415.1 444.6 476.1 509.9 545.9 584.3 625.5 669.6 716.8 764.1 914.4 Of which: NGOs 152.3 160.3 164.3 168.5 172.8 176.2 179.7 183.6 187.6 191.7 195.9 200.2 Officialtransfers 409.8 422.2 434.9 448.0 461.6 470.8 480.2 489.8 499.6 509.6 519.8 530.2 l.npot wpport 1/ 10.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Projectupport 399.8 422.2 434.9 448.0 461.6 470.8 480.2 489.8 499.6 509.6 519.8 530.2 Ohr -36.4 -39.0 -41.7 -44.7 -47.9 -51.3 -54.9 -58.8 -62.9 -67.4 -72.1 -77.2 Capital account 277.9 281.6 260.7 265.4 248.7 242.7 233.7 223.3 221.1 198.9 200.5 189.2 Official (net) 277.9 281.6 260.7 265.4 248.7 242.7 233.7 223.3 221.1 198.9 200.5 189.2 Disbursements 376.4 383.9 391.6 399.4 407.4 415.5 423.9 433.6 444.1 454.8 465.7 476.9 hnport spport 10.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Projectsupport 366.4 383.9 391.6 399.4 407.4 415.5 423.9 433.6 444.1 454.8 465.7 476.9 Amnortizationdue -98.5 -102.3 -130.9 -134.0 -158.7 -172.9 -190.1 -210.4 -223.0 -255.9 -265.3 -287.8 Private capital (net) 2/ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Overall balance 57.8 85.5 93.5 133.5 160.2 161.0 130.1 95.2 66.2 15.6 -15,6 -58.1 Financing -57.8 -85.5 -93.5 -133.5 -160.2 -161.0 -130.1 -95.2 -66.2 -15.6 15.6 58.1 From mnonetary authorities -83.2 -108.2 -115.0 -150.3 -178.6 -177.5 -145.6 -110.5 -83.3 -30.6 -0.1 46.0 Gross rervc cihange -34.0 -70.5 -89.9 -130.4 -173.0 -177.5 -145.6 -110.5 -83.3 -30.6 -0.1 46.0 NMF(net) -49.3 -37.6 -25.1 -20.0 -5.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Short-term 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Changein arrears(net) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Exceptionalfinancing3/ 25.4 22.7 21.6 16.9 18.3 16.5 15.5 15.2 17.1 15.1 15.7 12.1 Toward arrears reduction 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 CuTentimaturities -3.9 4.4 -2.4 -5.0 -4.1 -5.4 -5.9 -6.2 -4.4 -6.5 -6.1 -10.0 Fll assistance 29.3 27.1 23.9 21.8 22.4 21.9 21.4 21.4 21.5 21.6 21.8 22.1 Financing gap 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Memnndum itenm: Grorsinterational reserves4/ 3.6 3.6 3.7 3.8 4.1 4.3 4.4 4.4 4.3 4.1 3.9 3.6 Ndeinternationalreserves41 3.2 3.4 3.6 3.8 4.1 4.3 4.5 4.4 4.4 4.1 3.9 3.6 Current account-to-GDP ratio (in percent) hicluding official transfers -1.8 -1.5 -1.2 -0.9 -0.5 -0.5 -0.6 -0.6 -0.7 -0.8 -0.9 40.9 Excluding offieial transfers -5.1 -4.7 -4.2 -3.8 -3.4 -3.2 -3.1 -3.1 -3.1 -3.0 -3.0 -3.0 ExcludingofricialtransfersandFDI 5/ -8.2 -7.8 -7.4 -6.9 -6.5 -6.3 -6.3 -6.2 -6.2 -6.2 -6.1 -6.1 Debt-service ratio 61 Before rescheduling (including lMF) 13.2 11.8 11.8 10.8 10.5 10.1 10.1 10.1 9.8 10.0 9.5 9.3 Afterrescheduling(includinglMF)3/ 13.4 12.0 11.9 11.1 10.7 10.4 10.3 10.3 9.9 10.2 9.7 9.6 Afler}IDPC 11.5 10.4 10.6 10.0 9.7 9.4 9.5 9.5 9.2 9.6 9.1 9.0 NPV of debt before HUPC(including IM) 2,659.2 2,804.5 2,966.1 3,130.2 3,294.8 3,457.1 3,616.0 3,772.6 3,926.8 4,075.6 4,223.4 4,236.0 NPV of debt after HIPC (including IMF) 2,442.5 2,597.1 2,765.8 2,936.0 3,108.0 3,277.8 3,444.4 3,609.6 3,773.0 3,932.1 4,091.1 4,114.4 NPV of debt/exports ratio (before HIPC; in percent) Curnent-yearexports 167.8 161.4 156.0 151.2 146.4 141.3 136.1 130.7 125.2 119.7 114.2 108.8 Three-yearexportaverage 192.1 185.4 179.6 173.7 167.6 161.3 154.7 148.2 141.6 134.9 128.5 118.4 NPV of deWbexportsratio (after HIPC:in percent) Current-yearexpors 161.9 157.7 153.8 149.7 145.3 140.6 135.6 130.4 125.2 119.9 114.6 105.9 Three-yearexport average 176.4 171.7 167.5 162.9 158.1 152.9 147.4 141.8 136.0 130.2 124.4 115.0 Coffee price (in U.S. cents perkg) 157.8 161.0 164.2 167.5 170.8 174.2 177.7 181.3 184.9 188.6 192.4 196.2 Expodsofgoods,andnonfactorservices7 1,384.3 1,512.3 1,651.3 1,802.2 1,966.0 2,143.8 2336.9 2,546.3 2,773.6 3,020.2 3,287.6 3,577.7 Sources: Ugandan authorities; and Fund and World Bank staffestimates and projections. 11Excludes possible additional BOP support of about USS35 million in 1997/98. 2V Includes private short-term capital flows, foreign direct investment, and errorsand omissions. 3/ For 1996/97 and beyond, incorporates effects of Paris Club stock-of-debt operation and assumes reschedulinig witll non-Paris Club bilateral and conmnercial ereditorson termsviewed by the authorities as comparable. 4/ In months of imports of goods and nonfactor services. 5/ The authorities have made preliminary estimates of the foreign direct investment component of private transfers for 1995/96. These estiniates are currently bWingrefined based on the recomniendations of the recent STA tecimical assistance mission, and aIthough prelimniary, the available infomiation does provide a ber basis for projecting the evolution of private transfers. 6/ In percent of current-year exports of goods and nonfactor services. 7/ Three-year average  Table 4. Uganda: IDA HIPC Assistance, 1997/98-2008/09 (In millions of U.S. dollars) Totals 1997/98 1998/99 1999/00 2000/01 2001/02 2002,03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 IDA Grant Principal 75.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.5 1.5 Interest 15.3 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.5 Cash flow 90.3 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 2.1 2.0 NPV 24.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 IDA Buvback Principal 181.2 3.1 3.6 4.3 4.5 5.9 6.3 6.3 6.3 6.3 6.3 6.3 Interest 22.6 1.4 1.3 1.3 1.3 1.2 1.2 1.1 1.1 1.0 1.0 0.9 Cash flow 203.8 4.4 4.9 5.6 5.8 7.1 7.5 7.5 7.4 7.4 7.3 7.3 NPV 84.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 DebtServiceFund Principal 38.2 6.2 7.0 8.7 8.7 7.5 0.0 0.0 0.0 0.0 0.0 0.0 Interest 22.2 4.0 4.2 4.8 4.7 4.6 0.0 0.0 0.0 0.0 0.0 0.0 Cashflow 60.4 10.2 11.2 13.5 13.4 12.0 0.0 0.0 0.0 0.0 0.0 0.0 NPV 51.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total IDA Assistance Principal 294.4 0.0 9.3 10.6 13.0 13.3 13.4 6.3 6.3 6.3 6.3 7.8 7.8 Interest 60.2 0.6 5.9 6.1 6.6 6.5 6.4 1.7 1.7 1.7 1.6 1.6 1.5 Cash flow 354.5 0.6 15.2 16.7 19.6 19.8 19.7 8.1 8.0 8.0 7.9 9.4 9.3 NPVI 160.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Percent Reduction in IDA Debt Service 53.6 50.6 50.6 44.2 37.6 13.0 11.2 10.9 10.8 10.2 10.0  Table 5. Uganda: Delivery of INIFAssistance Underthe HIPC Initiative, 1998/99-2006/07 1/ (In millions of U.S. dollars,unless otherwise indicated) 1998/99 1999/2000 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 INIF Amount of assistance 2/ 68.9 Profile of delivery ( in percent of amount deposited in escrow account (principal)) 22.0 15.0 13.0 12.0 11.0 9.0 8.0 6.0 4.0 Repayments fallingdue on current IMF obligations 42.8 37.0 34.8 31.0 32.1 32.1 26.4 19.4 11.0 (in millions of SDRs) IMF HIPC assistance(in millions of SDRs) 2/3/ 11.8 9.8 8.3 7.5 6.7 5.4 4.6 3.4 2.4 Ofwhich: principal 11.3 7.7 6.7 6.2 5.6 4.6 4.1 3.1 2.1 tI Proportionof each repaymentfalling due during the period to be paid by HIPC assistancefrom the principal depositedinescrowaccount(inpercent) 26.3 20.8 19.1 19.8 17.6 14.4 15.5 15.8 18.6 Scheduled INIF debt service 4/ 7.5 5.9 5.0 4.1 3.9 3.6 2.7 1.8 1.0 Ofwhich: covered by IMF HIPC assistance 2.0 1.3 1.1 0.9 0.8 0.7 0.6 0.4 0.3 Memorandurnitemn: Exports ofgoods and nonfactorservices(current year) 807.1 893.1 990.6 1,072.9 1,162.6 1,263.4 1,380.9 1,508.6 1,647.3 1/ Uganda's fiscal year, beginningJuly 1. 2/ U.S. dollar amount to be deposited in SDRs in an escrow account at the completionpoint. The SDR equivalent is SDR 51.3 millionon the basis of a SDR/U.S. dollar exchangerate of 0.74 (March 18, 1998); to be updated once the decision is adopted at the completionpoint. 3/It is assumed that the amounts in escrow earn a rate of retum of 4.5 percent in SDR terms. Actual interest earnings may be higher or lower. Interest eamed will be accumulated throughthe fiscal year (July-June) and be used toward payment ofthe first repaymentobligation falling due in the following fiscal year, exceptin the final fiscal year, when it will be used toward payment of the final repaymentobligation falling due that year. 4/ In percent of current-yearexports of goods and services.