Uganda: Fitch affirms at 'B+'; Outlook stable

(AGI) - Roma, 3 aug. - Fitch Ratings has affirmed Uganda's Long-Term Foreign and Local Currency Issuer Default Ratings (IDR) at 'B+'. The Outlooks are Stable. The Country Ceiling has been affirmed at 'B+'. The Short-Term Foreign Currency and Local Currency IDRs have been affirmed at 'B'. Fitch forecasts real GDP growth to accelerate to 5.7% in FY16/17 from an estimated 4.6% in the previous fiscal year. The medium-term growth outlook remains positive, driven by high levels of infrastructure spending; projects include the ongoing construction of the Karuma and Isimba hydro-electric power plants, which are scheduled for completion in 2017 and 2018 respectively; the development of the oil sector, which will bring first oil in 2020 or 2021; and railway construction, for which feasibility studies are ongoing. A complementary increase in private sector development would further improve growth potential. Uganda's economic outlook will be helped by continued sound macroeconomic policymaking. The Bank of Uganda (BOU) has lowered interest rates by 200bps since March 2016, after tightening monetary policy in the previous year to contain the inflationary pressures of a depreciating exchange rate. There was an uptick in the May inflation rate, to 5.9% from 5.4% in April, but at 5.1% in July, inflation is close to the BOU's medium-term inflation target of 5%. Despite lower policy rates, bank lending rates remain high in Uganda and slowing credit to the private sector presents a downside risk to growth. (AGI) .