Moody's Investors Service has today assigned first-time local- and foreign-currency issuer ratings of B1 to the Government of Uganda. The ratings carry a stable outlook.
The rating assignment is based on the following key drivers:
(1) Uganda's relatively small economy and low per-capita income, albeit with favourable growth prospects given the improving security conditions and foreign investment inflows into its sizable resource sector.
(2) Weak institutional strength as reflected in weak governance indicators
(3) Moderate fiscal strength, as infrastructure needs and declining donor support have increased fiscal deficits, while the debt burden and related servicing costs remain low given IMF monitoring and a largely concessional funding base.
(4) Moderate susceptibility to event risk, which balances credit strengths such as adequate levels of foreign-exchange reserves, and large inflows of FDI against domestic political and social tensions stemming from food and fuel price increases and uncertainty about the future distribution and management of Uganda's oil wealth.
Moody's has also assigned a Ba1 ceiling for local-currency bonds and deposits, a Ba2 ceiling for foreign-currency bonds and a B2 ceiling for foreign-currency deposits.
The stable outlook reflects Moody's assessment of Uganda's prospects for continuing economic growth and fiscal reforms, which are likely to be supported by improving trade conditions, public investment and the prudent policies due in part to IMF's PSI programme.
