KAMPALA, UGANDA- Determined to restore high economic growth rate, private sector credit and to bring about low lending rates, Bank of Uganda has reduced Central Bank Rate (CBR) to 9.5 per cent from the previous 10%.
The BoU Governor Prof. Emmanuel Mutebile said there is a need to support the private sector and this can be done in many ways including the reducing of CBR.
“The country’s economic activities are slowly gaining momentum a cautious easing of monetary policy is warranted to boost private sector credit growth and strengthening the economic growth momentum” He explained
Mutebile noted that the growth in private sector credit however remains sluggish and this may affect the country, to achieve its economic growth projections which stand at 5.0% to 5.5% in the financial year 2017/2018 which is bit lower than estimates of potential GDP growth.
The slow Economic growth according to the governor is attributed to the poor performance of the Agriculture sector which is the major source of income to about 75% of Ugandan.
Quoting the UBOS report Mutebile said that the country recorded recovery in the second half of the financial year 2016/2017.
“Quarterly growth rates of only 0.6% and 1.1% were recorded in the first two quarters of 2017/2017 mainly because of bad weather that affected the agriculture sector .But growth rates accelerated to1.8% and 1.9%respectivelly in the third and fourth quarters of the financial year” Mutebile said.
Commenting on the Economic outlook for the next quarters the Governor promised that the outlook will look positive because of the supported accommodative monetary policy, improvement in public investment and improvement in the global economy
