04 The Impact of COVID -19 Impact on the economy Following the announcement of the first COVID-19 cases in March 2020, the government of Uganda instituted a number of strict measures to curb the spread of the pandemic. These included closures of schools and non-essential businesses, coupled with restrictions on public and private transport. These measures were lifted gradually over the course of the year as community infections slowed down. However, following the re-emergence of the 2nd wave of the pandemic in May 2021, government reinstated another total lockdown within the country. This was despite the fact that many citizens and businesses were still recovering from the earlier restriction measures. Schools were again shut down; curfew hours reinstated; non-cargo cross border movements were suspended; key business centers across the country were closed; public and private transport were suspended among several other measures. However, for an economy that was already shattered, such measures came with greater consequences. Prior to the 2nd lockdown, the country had already registered a shortfall of over UShs. 2.4 trillion in domestic revenue collections within FY 2020/21, thus weakening government’s capacity to provide public services including health at a time when 8 they were most needed. This was a result of the declining economic activity as many businesses had experienced a major blow on their cash flows because of the disruption of supply chains and a further decline in domestic and external demand. In the same vein, the financial sector witnessed huge capital flow reversals and an increased proportion of nonperforming loans. A non-performing loan is a bank loan subject to late repayment or which is unlikely to be repaid by the borrower in full. Owing to the decline in cash flows brought about by COVID-19, many businesses are unlikely to meet their loan repayments to commercial banks. Bank of Uganda indicated that the largest culprits are in the electricity and water sectors, followed by trade and commerce, mining and quarrying and lastly the agricultural sectors. Such loan defaults created major financial implications for the lender banks scrapping them of the liquidity they needed to maintain their operations. This in essence meant that some banks had to freeze credit to the private sector at a time when it was most needed. Research on the Influence of International Financial Institutions on Uganda’s COVID – 19 Recovery Agenda