Uganda
As a country well endowed with many substantial resources, Uganda, an African country, is blessed with great economic potential. However, years of self ruling and unstable economic management has made this country one of the least developed country, with a high percentage of poverty. The current president of Uganda, Museveni, helped in rebuilding the economy by negotiating a policy framework paper with the IMF and the World Bank. According to World Bank’s Worldwide Governance Indicators, the country annually loses 768.9 billion shillings or $286 million due to the severe problem of corruption. However, Uganda has maintained a stable debt position due to sound policies and public borrowing to relieve debts .
The pie chart above represents the Breakdown of the stock of external debt of Uganda as of the fiscal year 2009/10, according to debt analysis report compiled by the World Bank and the IMF jointly. The report concludes that Uganda’s public and external debts will remain sustainable. The graph below shows the possible scenarios of debt accumulations from the year 2011.
I
n February 2014, World Bank announced that it would postpone a loan of 90$ million to Uganda, due to the widely debated Anti-Homosexuality Bill. The lending history of Uganda by the World Bank is shown in the graph below (in millions of dollars).
Uganda has explicitly borrowed loans from the World Bank and the current credits of Uganda can be represented by the following graph.
The amount that remains to be disbursed from IDA is $1.5 billion. The IDA grants and credits are public, guaranteed debts by the World Bank. The IDA thus provided Uganda development credits, helping it develop its economic and social status. These loans were taken by the Ministry of Finance, Planning and Economic development for the overall economic development of the country.
IMF ended its support to Uganda in 1984, due to a disagreement over budget policy. This relationship was renewed in the 1990s by the NRM government’s Rehabilitation and Development Plan (RDP) . In 2010, IMF relaxed lending restrictions to Uganda, enabling the country to accept cheaper loans. This was done with regard to new policies related to low incomes countries. Before, Uganda has limited its lending activities from IMF due to its high interest rates. But this new policy has tremendously increased the flexibility in the loan terms. Under IMF's Policy Support Instrument, Uganda was able to design effective economic programs. On a recent survey to Uganda, IMF observed that, to achieve a favorable and better economic outlook, strong and supportive policies will be required. This led to improved credit conditions. IMF also recommended the government to increase the tax revenue collections and eliminate tax exemptions, increase exports and reduce imports from foreign countries. It provided loans that helped develop the country’s business prospects both locally and internationally.
The following table summarizes the loans, credits and grants to the country by the World Bank, as of 31 May 2014 .
Both the institutions implemented lending policies in relation with anti-poverty goals for Uganda. The loans by these institutions mandate that Uganda must privatize its key functions and markets.
China
The Asian country chosen for a lending history is China. The history of the World Bank with China goes back to the 1970s. World Bank played a very important role in China’s rise in the economy by supporting China’s matter-of-fact approach towards reforming itself. However, as China grew up and gained the confidence of international markets, China sought the Bank to fulfill its needs less and less . Though China remains to be one of the largest developed economies with a healthy economic growth, a recent update in June by World Bank states that the economic growth of the country is gradually slowing down due to its structural transformation .
In contrast to Uganda, which has a low economic growth, China is a developed country with a higher degree of economic growth. In fact, in the year 2010, China had a global reach so wide that it provided more loans than the World Bank itself. Recently, World Bank agreed to lend China $20 million for Green projects, aimed at investing on solar power and lithium batteries for more clean energy. The World Bank has also loaned $897 million to China for projects related to Forest Development. Most of the projects initiated were deemed satisfactory implemented projects by the World Bank. The World Bank also funded China's struggle against pollution by loaning $220 million. The project is expected to be completed by 2018. The following graphs show a summary of IBRD loans and IDA credits by China from the World Bank.
The lending history of China by the World Bank is shown in the graph below (in millions of dollars).
The following table summarizes the loans, credits and grants to the country by the World Bank, as of 31 May 2014 .
History of China with the IMF started in 1945, when People’s Republic of China took care of its relationship. In February 2001, China’s voting power increased to 2.95 percent due to the stamp of approval it got from the Board of Governors of IMF for increasing China’s quota from SDR 4,687.2 million to SDR 6,369.2 million. IMF and China have maintained a relationship where the IMF provided technical assistance to Chinese officials in the form of seminars and training programs like financial analysis and programming, balancing payments, external capital convertibility and so on. Currently, the IMF maintains a representative office in Beijing . In 2010, IMF warned China at the risk of bad loans due to its slow economic growth.
As compared to the World Bank, IMF is capable of lending less resources and funding to China, contributing to the country's large population. The IMF is better off not lending to China, since China is "too big to fail". China has a borrower's package of 9,600 billion Yuan; and the IMF warned China that it may not be able to repay its debts. Comparatively, the World Bank had a more positive influence on the Chinese economy.
References
(n.d.). Retrieved from Ministry of Economy, Trade and Industry: http://www.meti.go.jp/english/
At a Glance - China and the IMF. (2004, September). Retrieved from International Monetory Fund: https://www.imf.org/external/country/chn/rr/glance.htm
Bottelier, P. (2006). China and the World Bank: How a Partnership Was Built . CA: Stanford University.
Byrnes, R. M. (Ed.). (1990). Uganda: A Country Study. Washington: GPO for the Library of Congress. Retrieved from Country Studies: http://countrystudies.us/uganda/38.htm
China Economic Update - June 2014. (2014, June). Retrieved from The World Bank: http://www.worldbank.org/en/country/china/publication/china-economic-update-june-2014
Country Lending Summaries - China. (2014, May 31). Retrieved from The World Bank: http://go.worldbank.org/XWW8O4R5W0
Country Lending Summaries - Uganda. (2014, May 31). Retrieved from The World Bank: http://go.worldbank.org/D41946Y5D0
ET Bureau . (2014, April). India displaces Japan to become third-largest world economy in terms of PPP: World Bank. Retrieved from The Economic Times: http://articles.economictimes.indiatimes.com/2014-04-30/news/49523310_1_capita-income-third-largest-economy-world-gdp
Panda, A. (2014, May). World Bank: India Overtakes Japan as World's Third Largest Economy. Retrieved from The Diplomat: http://thediplomat.com/2014/05/world-bank-india-overtakes-japan-as-worlds-third-largest-economy/
The International Development Association and International Monetary Fund . (2011, June 16). Joint World Bank/IMF Debt Sustainability Analysis Update: UGANDA: DEBT SUSTAINABILITY ANALYSIS1. INTERNATIONAL DEVELOPMENT ASSOCIATION AND INTERNATIONAL MONETARY FUND UGANDA. Uganda. Retrieved from https://www.imf.org/external/pubs/ft/dsa/pdf/dsacr11308.pdf
Uganda Overview. (2014, April). Retrieved from The World Bank: http://www.worldbank.org/en/country/uganda/overview
