Friday , August 12 2022
Home / Business / Suspension of gold exports over new tax lowers Uganda’s trade balance

Suspension of gold exports over new tax lowers Uganda’s trade balance

Kampala, Uganda | THE INDEPENDENT | Uganda’s external trade in goods declined further in the month of July, with both imports and exports recording declines.

The import bill decreased by 436.80 million dollars while export receipts fell by 155.05 million dollars, according to latest information from the Ministry of Finance, Planning and Economic Development.

This resulted in a deficit of 196.37 million dollars in July 2021, compared to a deficit of 478.12 million registered the previous month.

Also, compared with the same month last year, there was a decline in both export receipts and the import bill, but this time, with export receipts falling faster than the import bill.

This means that the deficit widened by 7.2 percent between July 2020 when it was 183 million dollars, and July 2021.

While there was an increase in some export items like coffee, export receipts declined for the second consecutive month, mainly due to the lockdown containment measures at the time, meant to contain the rising cases of COVID-19. The month of July 2021, was under a lockdown which affected economic activity and disrupted trade.

In addition, government imposed a levy of 5% on every kilogram of refined gold and 10% on unprocessed gold being exported.

The processors and exporters have requested government to revise this tax downwards and negotiations are being held to this end, according to the Finance Ministry.

Consequently, exporters withheld their gold meant for exports in the month of July, awaiting for conclusion of these negotiations.

Because of this, export receipts declined by 30.4% on annual basis from 434.95 million dollars in July 2020 to 300.39 million in July 2021.

Other export items that recorded main declines in earnings include maize, cotton, tobacco, fish and fish products.

Comparison between June 2021 and July 2021, shows a decline in export receipts by 34% from USD 455.44 million to USD 300.39 million largely attributed to no exportation of mineral products during July 2021.

The East African Community (EAC) was the largest destination for exports, overtaking the Middle East.

This change follows the suspension of exportation of mineral products in July 2021 since the Middle East largely takes all Uganda’s mineral exports.

These therefore fell from 225.31 million dollars in July 2020 to 4.33 million in July 2021.

The EAC absorbed 40.6 percent of Ugandan exports, followed by the Rest of Africa and the European Union at 27 percent and 20.8 percent respectively.

Meanwhile, Uganda’s imports in July 2021 declined by almost half from June, to 496.76 million dollars.

This significant decline was mainly due to lower imports of mineral products that dropped to 15.46 million dollars from 316.31 million the previous month, as new tax measures took effect. Most of the mineral imports into the country are ores which are then processed for export, but since the exporters halted their activities, it had an effect on imports.

Apart from the minerals, other imports fell by 17.7 percent in July, mainly due to subdued economic activity during the time of lockdown.

As in previous months, most of the imports in July (46.6 percent) were from Asia, followed by merchandise from the EAC at 15.6 percent, while 13 percent were from the European Union.

The 63% drop in imports from the EAC was due to a drop in mineral imports. Almost two thirds of imports from the region were from Kenya, while 35% were from Tanzania.

During the month of July 2021, Uganda traded at a surplus with the EAC and the Rest of Africa but at a deficit with the Middle East, European Union, Rest of Europe, The Americas and Asia, according to the data.

Uganda registered surpluses of 44.32 million with the EAC and 60.33 million dollars with the Rest of Africa, a turnaround from deficits of 89.96 million and 164.42 million registered the same month, the previous year.

Uganda traded at a deficit of 54.7 million dollars with the Middle East in July 2021 as minerals exports fell, after having traded at surplus since April 2020.



Leave a Reply

Your email address will not be published. Required fields are marked *