KAMPALA: Uganda's central bank left its benchmark rate unchanged at 7% for the fifth meeting in a row on Wednesday, saying economic recovery was gaining pace.

"Economic recovery is proceeding and is stronger than was projected," the bank said in a statement. The economy contracted 1.1% last year, better than a forecast of -2%.

The economic upturn was less robust in certain sectors, such as education, hospitality and tourism, the bank said.

Some of Uganda's tight anti-coronavirus measures -- a night- time curfew, bar and partial school closures -- remain, keeping a lid on economic activity in those sectors.

The finance ministry says economic growth may climb to 4% to 5% in the fiscal year starting in July, helped by a recovery in demand.

The government's projection is broadly in line with that of the central bank, which expects the economy to expand at 4% to 4.5% during the fiscal year.

Surging public debt is weighing on Uganda's economic prospects. Total public indebtedness is expected to rise to 50% of gross domestic product this year.

"With the rising public debt, fiscal adjustments through higher taxes, lower expenditure or both might be required in the coming years to avoid a persistent increase in indebtedness and this could constrain demand," the central bank said.