Shs45 billion, bringing the total borrowings to Shs155 billion since the measures were introduced last year. In the Monetary Policy Statement issued this month, the central bank Governor Emmanuel Tumusiime Mutebile noted that these support measures have helped stabilise bank-to-bank interest rates which were threatened by pandemic-related shocks. For instance, interbank rates in particular have remained broadly stable secured by the Central Bank Rate (CBR) which has now been reduced to an all-time low of 6.5 per cent.
Apart from these emergency borrowings, the BoU has also put in place several actions in order to preserve money to support real growth amid the global health crisis. They include credit relief measures, bonuses, discretionary payments, liquidity support and suspension of dividends, among others. Yet, Uganda’s economy has remained subdued, particularly threatened by the second wave of COVID-19, which has overwhelmed the country’s healthcare system. According to the central bank, although the value of loan applications increased during the period ended April, suggesting a recovery in demand, however, there was a significant drop in loan approvals, signalling unfavourable financial conditions. This has resulted in growing challenges in credit access as commercial banks opt to invest in government debt through Treasury Bills and Bonds in order to avert risks.
