OREANDA-NEWS. Uganda's recent elections, which saw Yoweri Museveni returned for a fifth presidential term, are neutral for the country's sovereign credit rating, Fitch Ratings says. They have not resulted in widespread disruption, and fiscal and economic policy continuity is likely. However, risks could rise over time if the administration's political energy is increasingly directed towards retaining power or the question of who will eventually succeed Mr Museveni, at the expense of economic or fiscal policymaking.

The electoral commission's announcement that Museveni had won February's poll prompted Kizza Besigye, leader of the opposition Forum for Democratic Change, and other candidates to dispute the result. Mr Besigye was placed under house arrest and his party has claimed that over 200 of its supporters have been detained, but these events have not as yet triggered widespread social unrest or political violence.

International donors have not indicated that they will suspend financial support, although they have voiced concerns about the disputed election. US Secretary of State John Kerry said Besigye's detention and social media restrictions called into question Uganda's commitment to "transparent and credible" elections. European Union observers noted a lack of "independence, transparency and trust."

Uganda's budget is less vulnerable to an aid freeze because the share of revenue derived from grants dropped from 40% in 2002 to 8% in FY15, while donors have shifted from direct budget aid to project-specific support. This should continue as robust growth boosts other revenues and tax collection improves. When aid was suspended in the past, the authorities curbed current expenditure and raised revenue (for example, by cutting tax exemptions).

We affirmed Uganda's sovereign rating at 'B+'/Stable last August. Ratings sensitivities encompass the prospects for public and external finances and growth, and how these are affected by the macroeconomic policy framework and the business environment, infrastructure investment, and the political and security environment.

Large-scale infrastructure investment, notably on the Karuma and Isimba hydro-power dams, is supporting economic expansion (our real GDP growth forecasts are higher than the 'B' category median) but will also drive the budget and current accounts wider in 2016. The effectiveness of the policy response to this fiscal and external deterioration will remain an important part of our assessment. An unchecked, increasing debt burden would put pressure on the ratings.

One potential longer-term risk from Museveni's re-election is that the government expends more of its political capital on retaining power than on economic policy. For example, if Mr Museveni, who has held power for 30 years, wanted to run for the presidency for a sixth time, it would require a constitutional amendment to the upper age limit. If the government embarked on more populist economic policies to maintain popular support, this could damage the policy credibility that supports the rating.