Dr Suruma’s prudent fiscal policy has impressed many, including the International Monetary Fund (IMF), and has enabled Uganda to weather the financial storms raging through international markets.
The country faced the twin pressures of soaring food and fuel prices and the more general global economic downturn last year. Despite this, revenues remained strong, and credit to the private sector expanded at a record pace. Inflation was kept under control in 2008, rising to just over 7% from 6.8% in 2007. In the light of the extreme hikes in the prices of food and fuel earlier in the year, this is impressive.
During his three-year tenure, Dr Suruma has overseen strong economic growth and created a stable fiscal environment that has allowed the banking sector to flourish. Ugandan banks are now well capitalised, thanks to their adherence to Basel I recommendations, with an average ratio of liquid assets-to-deposits of 51%. As a result of this stability, banks from across the world have flocked to Uganda to set up operations. In the year to March 2008, bank deposits were up 26% and loans jumped 49%.
Dr Suruma said he was “deeply humbled” by the award and that it would be a source of great encouragement to the ministry of finance, the government and the country.
“Achieving a flexible balance between the powerful drive of the private sector and the interventions of the public sector is, in my view, critical to the growth and stability of the Ugandan economy,” he adds.
Looking ahead, times will get tougher for Uganda. The magnitude of the global economic slowdown will reduce demand for the country’s exports and foreign direct investment is likely to fall. The IMF estimates that GDP growth will drop to about 7% to 7.5% in 2008/09 – still a remarkably healthy figure. On the upside, the recent collapse in the oil price and drops in the prices of staple foods will ease inflationary pressures.
