, uganda ’ s current account position has worsened from a surplus of us $ 204. 7 million in the first half of 2007 / 08 to a deficit of us $ 401. 0 million registered in the first half of the current financial year. with most african countries running current account deficits of 5 percent or more of gdp, vulnerability to swings in the various sources of external financing is unavoidable. the likely slow down in global trade poses challenges for the tax revenue authorities. a possible below - target performance is anticipated for fy 2008 / 09 leading to higher than anticipated fiscal deficits for uganda and other african economies. portfolio investment could also fall, as greater risk aversion may keep capital closer to “ home ”. exit of offshore investors in capital markets was observed in the latter part of 2008 leading to instability in the foreign exchange markets and decline in share values across africa. although fdi is historically more resilient to shocks, some decline is anticipated. in addition, access to international capital by african governments and businesses may come at higher interest rates on account of risk - aversion of lenders. though budget priorities of donor countries are expected to shift with some impact on donor flows and aid to african economies, the recent g20 summit in london went a long way in reassuring the world and especially africa on the key issues of financing by the advanced countries and multilateral institutions like the imf and the world bank. the rescue package put in place by the industrial countries, and the one trillion us dollar package may go a long way to reverse the global recession. possible policy responses include fast - tracking regional integration to increase exports within the regional, consolidation of export - oriented trade policy measures, as well as investing in infrastructure aimed at increasing domestic productivity and reducing domestic resource cost ratios. iv policy measures that could be considered by the mdbs to increase access to finance the main challenges facing many african economies relate to addressing acute shortages of financing, especially for long - term public investment programs, private investment, and export trade financing. addressing these challenges remains critical for both minimizing the impact of the global crisis and positioning the continent to take advantage of opportunities arising from the global economic recovery after the crisis. credit crunch although many african economies survived the initial impact of the financial crisis due to lack of direct exposure to the american sub - prime mortgage debts, their access to international capital has been severely curtailed. for example, in the case of uganda, several entities are reported to have repositioned

is therefore best defined in terms of the cost of a representative, i. e. broad, basket of goods. an example which provides a clear and assessable yardstick of price stability is the basket underlying the euro area harmonised index of consumer prices. this encompassing definition of the underlying basket contrasts with partial, or so - called “ core ” measures of inflation. while these measures can be useful for assessing risks to price stability, they – if put front and centre – risk providing a distorted view of underlying price developments which would jeopardise the anchoring of inflation expectations. this would be particularly detrimental in situations in which globalisation might induce sustained movements of prices of certain categories of goods. a broad, transparent and widely accepted yardstick instead creates the necessary clarity to ensure a firm anchoring of inflation expectations. it is this clarity which allows a central bank to adopt a medium - term orientation within which policy - makers can appropriately discount short - term price volatility and transitory movements in inflation. as mentioned, globalisation is likely to change the structure of the euro area economy both with regard to goods markets and financial markets. a strategy which monitors structural changes both from a goods market angle and from a financial or monetary point of view is therefore well - suited to cope with the challenges brought about by globalisation. the complementary perspectives of the economic analysis and the monetary analysis, which underlie the ecb ’ s “ two - pillar strategy ”, are conducive to appropriately adapting our policies to the changing environment. at the same time, the two - pillar strategy keeps minds focused on the fundamental laws of monetary economics. in particular, having an explicit monetary pillar guarantees that the ecb always has considerable expertise in the analysis of monetary and credit developments and in the analysis of their impact on price stability. the close link between monetary developments and evolving imbalances in asset and credit markets implies that monetary analysis enables central banks to detect such imbalances at an early stage and to respond to the implied risks to price and financial stability in a timely and forward - looking manner. this has, in the past, proved an invaluable asset for the ecb, notably in times of global financial turbulence. just as the two - pillar strategy structures the discussion within the ecb, it also provides the basis for communicating our understanding of the economy to the outside world. by adhering to transparency, the ecb has achieved a high level of predictability for its monetary policy decisions. our