which amounts to less than 1 percentage point of gdp. but the only way that uganda's economy can benefit from the planned increase in investment is if spending agencies efficiently absorb the allocated funds and use them effectively. the key sectors of agriculture, transport and energy are now being urged to step up their absorption capacity if fiscal policy is to have the intended effect of cushioning the expected decline in domestic demand on account of lower private capital inflows. with respect to monetary policy, the bank of uganda will continue to pursue the objective of preserving foreign reserves and maintaining macroeconomic stability. this is important because the outlook for capital inflows of all forms ( fdi, portfolio, remittances ) is declining. specifically, the balance of payments ( bop ) shocks are partly being allowed to be absorbed via exchange rate adjustments, strengthening and broadening financial stability including cross border cooperation to ensure sound international financial rules and systems to minimize financial contagion. other issues lastly, there is need to take a step back and discuss how policies in uganda may differ from the approach adopted in some of the advanced economies. why can't uganda rely on borrowing much as the u. s. is currently doing? we should note that by maintaining the current spending profile in the face of a decline in revenues, the government of uganda is going to end - up with a higher fiscal deficit path over the medium - term. so uganda, too, will be relying on borrowing, albeit at a much smaller degree than the united states of america. second, unlike the u. s. a, uganda is financially constrained. to wit, the global financial crisis has led to lower borrowing rates for the u. s. government, notwithstanding the mounting fiscal imbalances. in contrast, interest rates on government securities in uganda have drifted upwards. this is partly because some investors sold local ugandan government securities to instead hold u. s. treasuries. why shouldn't the bank of uganda flood the ugandan financial market with liquidity much as the federal reserve has done? first and foremost, the inflation rate which remains in the double digits in uganda is a major concern, while in the u. s. the risk is of deflation. second, supplying more shillings will likely entail increases in inflation rate and reserve losses ( unless the exchange rate is of no concern ). and as discussed above, preserving foreign reserves to the extent possible should be one of the anchors of monetary policy in this highly uncertain environment.

louis kasekende : overview of the ugandan economy remarks by dr louis kasekende, deputy governor of the bank of uganda, at the closing of the ugandan business journalists training workshop by thomson reuters foundation, kampala, 5 march 2010. * * * distinguished guests, ladies and gentlemen good afternoon it is my singular honor and great pleasure to deliver closing remarks at the journalists ’ training. i would like to congratulate all of you for having completed this training program. your participation is an indication that you are ready to enhance your skills through such professional training programs. at the bank, we consider financial reporting as a key ingredient in the process of financial markets development. in the globalised world, efficiency in the financial markets is mainly driven by free flow of information, which investors can rely on for making their investment decisions. there is, therefore, a growing need for the emerging economies to continuously improve on the efficiency of information flow in order to compete internationally and attract foreign capital flows. this can only happen when the players get the right information. i wish to emphasize the important role played by professional business journalists in the development of financial markets. irresponsible and inaccurate reporting can cause instability in the market place and ruin investment prospects. i am sure with this training, focusing on ethical and responsible reporting in financial markets is a step in the right direction. as uganda ’ s financial sector appears on the radar screen of global investors, industry players and professionals rely on what they read, hear or see and this is largely posted by journalist in different forms of media. i would argue that responsible reporting in the current world where “ sentiment ” is key in driving financial markets is imperative to national economic development as well as to the stability of financial markets. this is a key component of the financial markets competitiveness and attractiveness not only to the foreign players but also to the domestic investors. the global meltdown in financial markets has reminded us all of the importance of financial and business journalism. arising out of these a number of profound questions as to the quality of that form of reporting have come up. the most common question that has been posed is – did the financial reporters fail to put the financial system under proper scrutiny? as you improve your skills please draw lessons from this past experience. it goes without saying that financial markets thrive on information, it is, therefore, critical that information is disseminated accurately, in a timely manner and in a well structured format. it should be relevant and more importantly