- 12.07.2023
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PRESS RELEASE
Amsterdam, 12 July
25 organisations have sent a letter today to the IMF Board and Management expressing concerns around the institution’s operations in Uganda in the fourth review of the arrangement under the Extended Credit Facility (ECF).
Under the current arrangement under the ECF, the IMF and the Ugandan government have agreed a macroeconomic strategy to enhance debt sustainability where oil extraction plays a big role. This is in complete contradiction with science: according to the IEA, “There is no need for investment in new fossil fuel supply in our net zero pathway”.
Oil exports will represent 29% of total exports according to the IMF in 2026/7. The IMF fails in this program to properly assess the risks associated with the development of the oil sector in Uganda. These include the huge social and environmental impacts repeatedly flagged by civil society, the balance of payment risks associated with huge capital expenditures, the practices of international fossil fuel companies and global transition spillover risks, as Recourse’s recent report with CECIC, SEATINI, ISER and EGI has shown.
Moreover, the IMF made affordances to the fiscal consolidation strategy to accommodate higher capital expenditures in the 2022-23 fiscal year related to the preparation of oil production, as domestic authorities were unable to negotiate for international oil companies to pay for needed infrastructure investments (e.g., construction of an oil jetty and pipeline) in exchange for a share of oil-related proceeds once oil production starts.
This means the IMF supported the frontloading of public investment to fossil fuels, while failing to do so for renewables.
We ask the IMF Board and Management to:
- Develop a macroeconomic strategy that relies on a just energy transition, public investments in adaptation policy, and a proper social safety net
- Ringfence investments in public renewables, accommodating capital expenditures for renewable technologies rather than on oil infrastructure or large hydro projects
- Ensure good environmental governance
- Support efforts to scale up international public climate finance that is aligned with 1.5C development pathways
For more information, contact:
Edwin Mumbere, Director at CECIC emumbere@cecicug.org
Federico Sibaja, IMF Campaign Manager at Recourse at federico@re-course.org or +32 491 19 93 67