Macroeconomic and welfare consequences of high energy prices

The current wave of volatile international oil process coupled with the low hydro-energy generation continues to exert negative impacts on the Ugandan economy. This paper analyzes the extent to which changes in energy prices affect the economy and examines policy options that can be undertaken to circumvent the negative effects. The impact of higher oil prices takes a large toll on all sectors including agriculture, manufacturing and services. With the existing loses in productivity of generating hydro electricity, this has exacerbated the energy crisis. The combined output loss for the manufacturing sector due to increase in fuel prices and a shortage of electricity is estimated at 2 percent on annual basis. While the government has title control on the international prices of oil, further private and public investments in the energy sector are called for to alleviate the shortages of energy.Oil, Energy, Hydro-electricity, Public investment, Twimukye, Matovu, EPRC, Industrial Organization, Institutional and Behavioral Economics, International Development, International Relations/Trade, Political Economy, Production Economics, Productivity Analysis, Public Economics, Resource /Energy Economics and Policy, Risk and Uncertainty,

Increasing world food prices: blessing or curse?

This study evaluates the potential impact of the recent world food prices on the Ugandan economy and possible policy options to respond to it. Uganda is largely a net exporter of some cereals whose prices increasing considerably especially maize. Using a recursive dynamic CGE model, we attempt to answer questions on who are the beneficiaries and losers after the surge in food prices. The rural producers of maize tend to benefit considerably with their poverty levels reducing. On the other hand, the urban purchasers of cereals are affected owing to the higher prices of food. this therefore suggests that the Ugandan government should take advantage of the increasing food prices by stimulating and undertaking policies that would enhance productivity especially for crops where on the urban population, the government could design targeted programs for the urban poor.Urban poor, Food prices, CGE model, Food security, Matovu, Twimukye, Economic Policy Research centre, Agribusiness, Agricultural and Food Policy, Agricultural Finance, Community/Rural/Urban Development, Consumer/Household Economics, Crop Production/Industries, Farm Management, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Livestock Production/Industries, Production Economics,

Tax evasion and widening the tax base in Uganda

Uganda still lags behind in its tax collections at the domestic level. For most of the commodities the tax collection effort is not more than 5 percent relative to the statutory rate of 18 percent. This results into a situation where the government has to rely a lot on foreign financing. From the analysis, there is a lot of improvement where URA can be able to increase its tax effort. this could be achieved by targeting commodities that are under-taxed and excluding food items for equity purposes. Increasing domestic collection would also result into less over reliance on taxing a few commodities especially fuel which is interlinked with a lot of other sectors and could indeed harm growth in the long-run. We also find that the tax effort on imports is sufficient. However, import duties on fuel remain very high and this could be a symptom of the poor domestic tax collection.Taxation, Tax base, Domestic taxes, import duty, Sennoga, Twimukye, Matovu, EPRC, Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Consumer/Household Economics, Crop Production/Industries, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Public Economics,

Social cash transfers for the poorest in Uganda

This paper mainly focuses on the various ways through which a social cash transfer program can be designed and financed. We identify four types of households which are considered to be vulnerable to be targeted with cash transfers. This includes households with orphans, old individuals, young and labor constrained. Extending a cash transfer to these households would lead to less poverty over the simulation period. these programs which would be constrained to less than 0.5 percent of GDP would have a small impact on the overall economy. By increasing taxes to finance the program this would wipe out the potential benefits of the cash transfer program of reducing poverty.Poverty, Cash transfers, Vulnerable groups, Sennoga, Twimukye, Matovu, EPRC, Poor people, Agricultural and Food Policy, Community/Rural/Urban Development, Consumer/Household Economics, Crop Production/Industries, Financial Economics, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Health Economics and Policy, Institutional and Behavioral Economics,

Sectoral and welfare effects of the global economic crisis on Uganda: a recursive dynamic CGE analysis

This paper analyses the impact of the global economic and financial crisis on Uganda notably on macro-economic aggregates, sectoral output and household welfare, and the potential role of fiscal policy and reform in mitigating the impacts. We find that second round effects from a reduction in financial inflows such as remittances, foreign direct investments and overseas development assistance, as well as reduction in international demand from cash crops such as cotton, tea and coffee, could lead to a reduction in economic growth by 0.6 percentage points on average annually over the period 2008- 2010 compared to a baseline reflecting pre-crisis conditions. A surge in regional exports and early counter-cyclical policies in particular are found to dampen the most adverse impacts of the crisis. The paper also shows that the impact of the government’s expansionary 2009/2010 budget could return growth to pre-crisis levels and illustrates how a re-prioritization of government expenditure away from expenditure on administration to more productive sectors of the economy, combined with reforms to improve the efficiency of public spending, could lift long-term growth and reduce poverty, especially in rural areas, even more.Sub-Saharan Africa, Uganda, global economic and financial crisis, computable general equilibrium (CGE), Consumer/Household Economics, Financial Economics, Industrial Organization, International Development, Production Economics, Public Economics, C68, D58, E62, F15, H62, I32,

Macroeconomic and welfare consequences of high energy prices

The current wave of volatile international oil process coupled with the low hydro-energy generation continues to exert negative impacts on the Ugandan economy. This paper analyzes the extent to which changes in energy prices affect the economy and examines policy options that can be undertaken to circumvent the negative effects. The impact of higher oil prices takes a large toll on all sectors including agriculture, manufacturing and services. With the existing loses in productivity of generating hydro electricity, this has exacerbated the energy crisis. The combined output loss for the manufacturing sector due to increase in fuel prices and a shortage of electricity is estimated at 2 percent on annual basis. While the government has title control on the international prices of oil, further private and public investments in the energy sector are called for to alleviate the shortages of energy

Increasing world food prices: blessing or curse?

This study evaluates the potential impact of the recent world food prices on the Ugandan economy and possible policy options to respond to it. Uganda is largely a net exporter of some cereals whose prices increasing considerably especially maize. Using a recursive dynamic CGE model, we attempt to answer questions on who are the beneficiaries and losers after the surge in food prices. The rural producers of maize tend to benefit considerably with their poverty levels reducing. On the other hand, the urban purchasers of cereals are affected owing to the higher prices of food. this therefore suggests that the Ugandan government should take advantage of the increasing food prices by stimulating and undertaking policies that would enhance productivity especially for crops where on the urban population, the government could design targeted programs for the urban poor

Aid allocation effects on growth and poverty: A CGE framework

It has been argues that increased aid causes Dutch disease as a result of appreciation of the exchange rate which reduces the competitiveness of the country's exports. In this paper, we argue that if the aid is used productively, there are both short and long term gains. Applying a recursive dynamic general equilibrium model on Uganda, we find that while the currency appreciates and some exports decline, the overall impact on growth outweighs the losses in competitiveness. In addition, it aid is used productively, poverty would be substantially reduced as long as the aid increase is sustained

Social cash transfers for the poorest in Uganda

This paper mainly focuses on the various ways through which a social cash transfer program can be designed and financed. We identify four types of households which are considered to be vulnerable to be targeted with cash transfers. This includes households with orphans, old individuals, young and labor constrained. Extending a cash transfer to these households would lead to less poverty over the simulation period. these programs which would be constrained to less than 0.5 percent of GDP would have a small impact on the overall economy. By increasing taxes to finance the program this would wipe out the potential benefits of the cash transfer program of reducing poverty

Sectoral and welfare effects of the global economic crisis on Uganda: a recursive dynamic CGE analysis

This paper analyses the impact of the global economic and financial crisis on Uganda notably on macro-economic aggregates, sectoral output and household welfare, and the potential role of fiscal policy and reform in mitigating the impacts. We find that second round effects from a reduction in financial inflows such as remittances, foreign direct investments and overseas development assistance, as well as reduction in international demand from cash crops such as cotton, tea and coffee, could lead to a reduction in economic growth by 0.6 percentage points on average annually over the period 2008- 2010 compared to a baseline reflecting pre-crisis conditions. A surge in regional exports and early counter-cyclical policies in particular are found to dampen the most adverse impacts of the crisis. The paper also shows that the impact of the government’s expansionary 2009/2010 budget could return growth to pre-crisis levels and illustrates how a re-prioritization of government expenditure away from expenditure on administration to more productive sectors of the economy, combined with reforms to improve the efficiency of public spending, could lift long-term growth and reduce poverty, especially in rural areas, even more