sector, or are joint ventures between private investors and the government. in principle, commercial infrastructure projects can be financed independently of governments, provided that potential creditors are convinced that the project will generate sufficient revenues over the long term to service its debt in full, as well as meeting its other costs. furthermore, these types of projects may benefit from financing that is specifically structured to meet the idiosyncratic requirements of the project, especially in terms of its cash flow and upfront capital expenditures. hence it may be more optimal for finance to be raised through bank loans or syndicated bank loans, rather than through bonds. commercial projects are often financed with foreign currency denominated loans raised on external capital markets, either because the quantum of finance required is too large to be mobilised domestically or due to a large share of the capital costs of the project taking the form of foreign currency payments. if debt is contracted in foreign currency, the government must provide a commitment that the debtor will always be able to purchase foreign currency to service its debt and that no capital account restrictions will be imposed to prevent the debtor from paying its creditors. beside the commercial viability of the infrastructure project, the other key requirement for raising finance for commercial projects is an institutional framework that guarantees the legal rights of creditors, including appropriate legislation and honest and efficient commercial courts. if the domestic legal framework is not perceived as being adequate, creditors may require that any disputes be settled in a foreign jurisdiction. a key feature of many, although not all, commercial infrastructure projects is that they operate in monopsonistic markets ; for technical reasons they can sell their output to only one customer, which is often a state owned enterprise. this is usually the case for power generation projects. as a consequence, the project is vulnerable to the abuse by the monopsonist of its market power, which could have serious consequences for the commercial viability of the project and thus its ability to service its debt. to safeguard the viability of the project, it will usually be necessary for the monopsonistic user of the infrastructure services to sign a legally binding long term agreement to buy the services at predetermined prices. again, if these agreements are to be credible, the local legal system must be able to enforce their implementation. finally i would like to make a few remarks about public private partnerships ( ppps ) as a vehicle for building infrastructure projects. there are several sound reasons for using ppps to develop some infrastructure projects. in particular, projects

emmanuel tumusiime - mutebile : macroeconomic management in turbulent times presentation by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, to the nrm ( national resistance movement ) retreat, kyankwanzi, 19 january 2012. * * * introduction i want to begin by reminding you of the difficulties which are currently facing economies all over the world. the imf has warned that the global economy has entered a “ dangerous new phase ”. also, the world bank, in its global economic prospects report released this week, warned that the “ world economy has entered a very difficult phase characterised by significant downside risks and fragility ”. given that the ugandan economy is closely linked to the rest of the world through trade, tourism, workers ’ remittances, donor aid, foreign direct investment and other types of capital flows, it cannot be fully insulated from the serious problems affecting other parts of the global economy. we should bear this in mind when debating the available policy options for our own economy. since the global financial crisis in 2008 and the subsequent great recession in industrialised countries, the global economic environment has become much less propitious for developing countries such as uganda. the global economy has become more volatile and generates macroeconomic shocks which are transmitted to developing economies. this means that we have to be more cautious in our approach to macroeconomic management and to build up buffers of resources – for example foreign exchange reserves – which can help us to ride out economic or financial shocks when they occur, as they inevitably will. sound macroeconomic management, including prudent fiscal and monetary policies, will become even more important in this age of global turbulence than they have ever been in the recent past. the current economic situation three broad trends characterise the current economic situation, pertaining to real economic growth, the balance of payments and inflation. real economic growth economic growth in uganda has been relatively robust despite the problems in the global economy. real gdp growth dipped just after the onset of the global financial crisis, to 5. 9 percent in 2009 / 10, from the growth rates of 7 – 8 percent recorded prior to the global financial crisis, but then recovered to 6. 7 percent in the last fiscal year. this is shown in figure 1. growth in the industry and services sectors has been consistently strong over the last five years, in most years growth rates in these sectors have exceeded 6 percent per annum ; but in contrast agricultural growth has