The December 2020 Pre-Election Economic and Fiscal Update released by the Ministry of Finance, Planning and Economic Development i has indicated that lending institutions approved loans worth She2.6Trn in the first quarter of 2020/2021 between July-September 2020.
The report that was signed off by Moses Kaggwa Acting Director Economic Affairs on behalf of Secretary to Treasury, Keith Muhakanizi revealed that in the first quarter of 2020/21, loans worth Shs2.650Trn were approved for disbursement to the private sector by lending institutions leading to a cumulative stock of Shs17.221Trn in September, 2020 which translated into a growth of 1.4 percent in the stock of outstanding private sector credit over the quarter.
The release of the report is hinged on the provisions in Section 19(1)(a) of the Public Finance Management Act (PFMA) 2015 that requires the Minister of Finance to publish a pre-election economic and fiscal update not earlier than four months before the polling day for a general election.
The Ministry of Finance attributed the growth in credit, in part, the easing of prudential regulations by the Central Bank to mitigate the adverse impact of Covid-19 on lenders and borrowers like issuance of waivers on limitations associated with restructuring of credit facilities, and providing exceptional liquidity assistance for a period of up to one year to financial institutions supervised by Bank of Uganda that may require it.
The update also revealed that lenders have been able to reduce on bad loans with Government revealing that as at September 2020, Non-Performing Loans (NPLs) to total gross loans stood at 5.15%, a reduction from 6.01% recorded in June 2020.