Fiscal Policy Consistency and Its Implications for Macroeconomic Aggregates: The Case of Uganda

The study employed the accounting approach to fiscal policy consistency to analyse the sustainability of Uganda's fiscal policy. The deficits were calculated from the financing side by considering increases in liabilities of the consolidated government. To assess whether the deficits have been compatible with other macroeconomic targets, the financeable deficit is derived and compared with the calculated actual deficits. The results show that the consolidated deficit is consistent with attainment of target outcomes for other macroeconomic variables, most notably inflation and gross domestic product growth rates. However, the inflation target has been achieved at the cost of an unsustainable domestic debt.