Browsing: Central Bank of Uganda

Uganda’s Central Bank makes reforms to boost economy

Uganda’s Central Bank appointed seven banks to compete at its auctions of treasury bonds and bills, reforming the primary dealership system in a bid to bolster the country’s economy.

At each auction, the primary dealer banks will bid above $54,040.08 and then resell the bonds to other investors on the secondary market.

The primary dealer banks include Centenary, ABSA, bank of Baroda, Development Finance Company of Uganda (DFCU), Stanbic Bank, Housing Finance Bank and Standard Chartered Bank. Experts in Uganda say that the move will improve the attractiveness of the country’s treasuries to investors at home and overseas.

These investors include overseas buyers, non-primary dealer commercial banks, firms and ordinary Ugandans that are looking to enjoy interest payments from government and to use the treasuries as collateral.

“In order to enhance liquidity in the secondary market, effective October 01, 2020, competitive bidding in the primary market for Government securities shall …

Uganda's Central bank keeps benchmark lending rate steady

Uganda’s exports for the period ending September experienced an 8 per cent decline, according to the Central Bank of Uganda.

According to a report released by the Bank of Uganda last week, it indicates that earnings from exports for the period ending September stood at $296m compared to $326m in August.

Despite the decline, gold, which has become a key export commodity for Uganda among others such as coffee, fish, tobacco and maize, stood out as some of the commodities that hit impressive earnings during the period.

The report shows that in the period ending September, a total of 1,530 kilogrammes of gold were exported noting that the exports were less than the 1,755 kilogrammes that were exported in August.

Uganda’s Export Promotion Board trade and information executive, Mr John Lwere said they were still analyzing the trends in performance. He also noted that gold is gradually becoming part of …

Uganda cuts policy rate to support economic growth

The Bank of Uganda reduced its interest rates for the first time since February 2018 in a bid to support economic growth.

The monetary policy committee agreed to reduce the central bank rate by 1% to 9%. The rediscount rate and the bank rate were also adjusted by a similar amount to 13% and 14%, respectively.

This rate cut is expected to be of relief to businesses facing cash difficulties in funding operations or expansion. Businesses that are struggling with low sales and reduced household spending, can also get a boost from the rate that is cut through consumer lending.

“This policy move is expected to boost already high liquidity levels in the banking sector and this will eventually accelerate credit growth and real economic activity,” said Adam Mugume, Executive Director for Research at Bank of Uganda (BoU).

Also Read: Bank of Uganda warns of rising cost of debt repayment

Bank of Uganda warns of rising cost of debt repayment

The Bank of Uganda has warned government against the accumulation of foreign debt, saying the central bank is under a lot of pressure to obtain foreign exchange to repay loans.

Speaking during the IMF and AfDB-organised conference in Kampala during the weekend, Bank of Uganda Governor Emmanuel Tumusiime Mutebile, said that the rising cost of servicing the debts is putting pressure on the Central Bank to accumulate foreign exchange reserved for future imports.

“The biggest challenge for Bank of Uganda (BoU) is how to accumulate foreign exchange reserves to service external debt. The forex reserves have to be purchased from the domestic market, without causing sharp exchange rate depreciation pressures that would eventually pass through to domestic inflation, thereby warranting tightening of monetary policy and later on impacting on economic growth,” said Mr Mutebile

Mr Mutebile revealed that for instance, in the 2019/20 financial year, the central bank has to …