Bank of Uganda (BoU) yesterday announced an extension Credit Relief Measures for another six months.
The move aims at helping commercial banks and other supervised financial institutions to continue restructuring loans and also provide loans to the commercial banks and financial institutions to lend out to the business community.
Bank of Uganda will also maintain Central Bank Rate at seven per cent as well as the Covid-19 Liquidity Assistance programmes (CLAP) to the commercial banks, credit institutions and microfinance deposit taking institutions.
In a statement issued yesterday, the deputy Governor of Bank of Uganda, Dr Michael Ating-Ego, said: “In addition, BoU will extend for six months effective April 1 the Credit Relief Measures (CRM) and also maintain the CLAP to the supervised financial institution.”
He added: “Bank of Uganda will review CLAP from time to time as the pandemic evolves to ensure viability of solvent supervised financial institutions that may come under liquidity stress during the pandemic and to support credit extension.”
Hinting on the economy, Dr Atingi-Ego said: “As the vaccine becomes readily available in Uganda and the spread of Covid-19 is contained, tourism is expected to rebound. In addition, exports should benefit from strengthening foreign demand, reduced pandemic-related uncertainty and improving global investment.”
Dr Ating-Ego explained that the medium term economic outlook continues to be highly conditional on the timeline of the world-wide vaccines rollout and the course of the virus and its new variants.
Ms Razia Khan, chief economist for Africa and Middle East in Standard Chartered Bank about BoU’s maintaining the central bank rate at seven per cent for two months, said: “The Bank of Uganda held its policy rate unchanged at seven per cent as expected, however, there are some risks to our expectation of an early tightening.
While the BoU is mindful of fiscal risks, it nonetheless sees inflation as ‘benign’, and expects to see a further deceleration in core inflation.”
Ms Razia also said BoU notes that the economic recovery has lost some of its earlier momentum, amid rising Covid-19 cases.
“Somewhat predictably, it has taken the decision to extend Covid-19 credit relief measures for six months from April 1, when the extraordinary measures were otherwise due to come to an end.”
Measures
The Bank of Uganda held its policy rate unchanged at seven per cent as expected, however, there are some risks to our expectation of an early tightening,” Ms Razia Khan, chief economist for Africa and Middle East in Standard Chartered Bank.