BoU Governor Prof.Emmanuel Tumusiime-Mutebile
Bank of Uganda’s Monetary Policy Committee (MPC) held on 14th April 2021 maintained the Central Bank Rate (CBR), a benchmark lending rate for commercial banks at 7%.
BoU Governor Prof.Emmanuel Tumusiime-Mutebile said the “the economic recovery is proceeding and is stronger than expected at its last meeting in February 2021.”
BoU said the Uganda Bureau of Statistics (BoU) in its updated quarterly GDP estimated the contraction in real GDP at 1.1% in 2020, lower than initial projections of up 1.6% a year earlier, a significant improvement compared to the improved contractions of 6.1% and 0.1%, respectively, in the quarters to June and September 2020.
“The economic upturn is, however, less sanguine in certain activities of the service sector, particularly education, hospitality and tourism. Indeed, the service sector is estimated to have contracted by 2.6% in the quarter to December 2020,” Mutebile said.
He revealed that high frequency economic indicators for the first quarter of 2012 indicate a gradual strengthening of economic activity but still at a subdued pace.
“Economic growth outlook remains unchanged at 4.0%-4.5% in FY 2021/22,” Mutebile said, adding: “Nonetheless, the recovery is expected to strengthen, with above-trend growth in outer years as vaccine effectiveness increases, which would allow for reduced social distancing and a rebound in consumption.”
He however said banks are set to register high Non-Performing Loans (NPLs) this year as the real impact of COVID-19 pandemic on businesses and individuals becomes more clearer.