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Uganda Might Face Inflation Increase due to Post-Election Spending, Ugandan Activists

Kampala -Uganda’s economy could be shaken by inflationary pressures if the government does not enforce measures to get rid of excess money, debt monitoring experts warned yesterday.


They say the money was pumped into circulation during the just concluded general election.

Bank of Uganda last month indicated that inflation increased from 7.1 per cent in January to 7.6 per cent in February but did not blame the spike on election-related money in circulation but rather attributed it to increased expenses on annual energy, fuel and utilities.

But a report by Alliance for Campaign Finance Monitoring (ACFIM), a loose coalition of CSO activists, last month indicated that Mr Museveni spent Shs27b on campaigns between November and December last year, 12 times more than his two closest challengers combined.

Independent presidential candidate Amama Mbabazi spent a total of Shs1.3b or 4.6 per cent in the same period.

Dr Kizza Besigye, the FDC presidential candidate spent a total of Shs976m or 3.3 per cent.

It is this money that was pumped into circulation that the Uganda Debt Network (UDN), which campaigns for debt relief, warned that might send the economy into a tailspin if the government does not map a strategy to rid the economy of excess cash.

"In the last months of the election period, we have seen inflation rise from 5 per cent to 7.6 per cent and we expect it to go higher because the population is in consumption mood," Mr Patrick Tumwebaze, the executive director of the Uganda Debt Network, told the press yesterday.

In the past.

Following the 2011 elections, inflation shot up to 30.5 per cent as the Shilling depreciated to almost 2,900 to the dollar, triggering the Opposition led walk-to-work protests against the rising cost of living.

The sharp rise in the 2011 inflation to a record 30 per cent was largely blamed on the money the ruling NRM party had used to secure victory for Mr Museveni.

Uganda Debt Network put the government on notice to devise a strategy of checking the inflationary pressures.

The caution by UDN vindicates a 2013 report by Standard Chartered Bank that warned that increased spending in the elections would increase money in circulation and thus inflationary pressure.

The ’Global Focus 2014; Rising East, Emerging West’ report warned that expectations of increased government spending in the run-up to the 2016 general election may increase inflation.

By Robert Muriisa.

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