sold back into the market. so the odds are high that the purchase programs that the fed has undertaken in support of the recovery will end up reducing, not increasing, the federal debt, both through the interest earnings we send the treasury and because a stronger economy tends to lead to higher tax revenues and reduced government spending ( on unemployment benefits, for example ). even though our activities are likely to result in a lower national debt over the long term, i sometimes hear the complaint that the federal reserve is enabling bad fiscal policy by keeping interest rates very low and thereby making it cheaper for the federal government to borrow. i find this argument unpersuasive. the responsibility for fiscal policy lies squarely with the administration and the congress. at the federal reserve, we implement policy to promote maximum employment and price stability, as the law under which we operate requires. using monetary policy to try to influence the political debate on the budget would be highly inappropriate. for what it ’ s worth, i think the strategy would also likely be ineffective : suppose, notwithstanding our legal mandate, the federal reserve were to raise interest rates for the purpose of making it more expensive for the government to borrow. such an action would substantially increase the deficit, not only because of higher interest rates, but also because the weaker recovery that would result from premature monetary tightening would further widen the gap between spending and revenues. would such a step lead to better fiscal outcomes? it seems likely that a significant widening of the deficit – which would make the needed fiscal actions even more difficult and painful – would worsen rather than improve the prospects for a comprehensive fiscal solution. i certainly don ’ t underestimate the challenges that fiscal policymakers face. they must find ways to put the federal budget on a sustainable path, but not so abruptly as to endanger the economic recovery in the near term. in particular, the congress and the administration will soon have to address the so - called fiscal cliff, a combination of sharply higher taxes and reduced spending that is set to happen at the beginning of the year. according to the congressional budget office and virtually all other experts, if that were allowed to occur, it would likely throw the economy back into recession. the congress and the administration will also have to raise the debt ceiling to prevent the treasury from defaulting on its obligations, an outcome that would have extremely negative consequences for the country for years to come. achieving these fiscal goals would be even more difficult if monetary policy were not helping support the economic recovery. what is

david opiokello : overview of economic achievements in uganda farewell speech by mr david opiokello, acting deputy governor of the bank of uganda, in honour of mr peter allum, imf senior resident representative in uganda, kampala, 5 july 2006. * * * mr. peter allum, the outgoing imf senior resident representative in uganda distinguished guests staff of the bank of uganda ladies and gentlemen on behalf of the governor, the board, management and staff of the bank of uganda, it is my pleasure to welcome you all to this function. this occasion was organised to pay special tribute to mr peter allum as he prepares to return to washington. as you may be aware the bank of uganda has had the privilege of working very closely with him over the last three years or so. before making specific remarks about mr. allum ’ s contribution towards uganda ’ s recent economic developments, let me first reflect and remind ourselves of some of the important economic achievements made in the past several years. as you all know, with the support of development partners, uganda undertook a major economic reform program aimed at creating sustainable economic stability, growth, and prosperity for all through poverty eradication in the late 80s and nineties. in these first round of reforms, which occurred between 1987 and 1999, the country underwent numerous adjustment measures. these measures included : • the restoration of monetary and fiscal discipline intended to establish macroeconomic stability ; • deregulation of prices designed to induce efficient allocation of resources ; • a gradual liberalisation process of the uganda ’ s foreign exchange markets intended to promote uganda ’ s competitiveness. further reforms were undertaken to transform public and private enterprise activities, and the domestic financial system, in order to meet national objectives of improved productive efficiency and increased resource mobilisation. the combination of the above measures effectively set the foundation for further successes that have been recorded. these successes included : • growth in the size of the economy from about us $ 3 billion in the early 1990s to over us $ 9 billion now ; • increased real domestic investment. increases in the private sector foreign exchange inflows into the ugandan economy have supported the expansion in domestic investment. for instance, private transfers grew from us $ 256. 5 million in the fiscal year 2000 / 1 to us $ 650. 44 million in 2005 / 6, while foreign direct investment ( fdi ) increased from us $ 133. 4 million to us $ 263. 83 million over the same period ; • sustained price stability.