Bank of Uganda has warned that inflationary pressures are beginning to mount on the annual core rate of inflation which had been kept under control at a minimum low of 3.3 per cent until May this year.While commissioning Standard Chartered Bank’s Acacia Mall Branch , Bank of Uganda Governor Emmanuel Mutebile warned that core inflation is expected to double in the next financial year because inflationary pressures are expected to be stronger next year.In macro-economics, core inflation measures the inflation that excludes consumer goods and services like energy and food which often face volatile prices. It is sometimes viewed as an indicator of underlying long-term inflation. Read more

The Uganda Shilling opened the week at its weakest standing since the beginning of the year with experts predicting a further depreciation.At the opening of business, the local unit was trading in the range of 2614/2624 against the US dollar, up from the 2605/2615 it traded. The depreciation for the last one month has seen the Shilling lose ground by more than 3 per cent from 2530/2540 it traded around the same time in May to the current 2614/2624.Although some have attributed Shilling’s decline to the recent United States aid suspension to Uganda, Bank of Uganda (BoU) director research Adam Mugume has said: “The weakness is associated with the anxiety associated with the recently presented 2014/15 Budget.” Read more

Commercial banks in Uganda are not heeding to Bank of Uganda’s call to reduce interest rates and lend more to the private sector. High interest rates have put off many borrowers in Uganda.Bank of Uganda reports state that there has been only a modest increase in the stock of private sector credit. It said the level of private sector credit at the end of December 2013 was sh8.62 trillion, which is about 8% higher than the June 2013 levels.The ministry of finance states that in spite of a reduction in both inflation and the Bank of Uganda policy rate, lending rates charged by commercial banks continue to be prohibitively high and are keeping borrowers away from the credit markets.“We will continue to work with financial institutions to reduce the cost of loanable funds, by reducing the cost of doing business. There are a number of reforms that are expected to have a positive impact on financial sector,” finance minister Maria Kiwanuka said.Read more

Commercial banks in Uganda are not heeding to Bank of Uganda’s call to reduce interest rates and lend more to the private sector. High interest rates have put off many borrowers in Uganda.Bank of Uganda reports state that there has been only a modest increase in the stock of private sector credit. It said the level of private sector credit at the end of December 2013 was sh8.62 trillion, which is about 8% higher than the June 2013 levels.The ministry of finance states that in spite of a reduction in both inflation and the Bank of Uganda policy rate, lending rates charged by commercial banks continue to be prohibitively high and are keeping borrowers away from the credit markets.“We will continue to work with financial institutions to reduce the cost of loanable funds, by reducing the cost of doing business. There are a number of reforms that are expected to have a positive impact on financial sector,” finance minister Maria Kiwanuka said. Read more

Ugandan commercial banks stepped up efforts to clean up their books by writing off bad loans, highlighting the growing debt risks in the market.The quality of loans in Uganda’s banking industry has been deteriorating for the past two years, following a rise in lending rates to more than 30 per cent as the Central Bank tightened the monetary policy stance to curb inflation which peaked to 30.4 per cent in October 2011.The turbulent economic environment made it challenging for those who had taken loans to repay the loans as their income streams were negatively impacted by subdued demand and constrained growth in the market. As a result, many commercial banks are now being forced to write-off huge amounts of unpaid loans Read more

The average lending rate on Shilling denominated loans rose to 21.9 per cent from 20.7 per cent in February 2014, a development which indicates that the cost of loans is getting expensive once again.Average/commercial lending rates are those charged by banks on the loans that they lend out to the general public. These are different from the Central Bank Rate which is a policy rate set by the Bank for loans lent out to commercial banks.Similarly, the new development in Uganda’s credit market shows that the time deposit rate on shilling loans also rose from 11.1 per cent to 12.4 per cent in March 2014. On the contrary though, the rate on foreign currency denominated loans, remained relatively stable, declining only marginally to 9.4 per cent from 9.7 per cent in February. Read more

The Ugandan shilling fell on Friday, sapped by demand from energy and manufacturing firms and on reduced growth expectations after the central bank cut its forecast for economic output.Commercial banks quoted the currency at 2,525/2,535 down from Wednesday's close of 2,515/2,525. Ugandan markets were closed for Labour Day on Thursday."The market is receiving a lot of end month-related demand from the manufacturing and energy sectors," said Shahzad Kamaluddin, a trader at Crane Bank.Also, "the central bank's new forecast for growth signals the economy isn't doing very well... that's not good news for the shilling." Earlier on Friday, Bank of Uganda cut its growth forecast for the 2013/14 fiscal year to 5.7 percent from 6 percent while holding the benchmark interest rate at 11.5 percent.David Bagambe, a trader at Diamond Trust Bank Uganda, said the shilling was also being undermined by market expectations of a slowdown in hard currency flows from offshore investors.Read more

Less demand for the dollar has kept the Uganda Shilling strong; a situation experts say is good for the economy which is largely dependent on imports.According to the Bank of Uganda’s daily report, by close of yesterday, the shilling was trading in the ranges of 2,514/2,524 against the 2,517/27 it traded on early this week.Explaining this performance, Standard Chartered Bank’s Head of Financial Markets James Mutuku said: “The strengthening of the shilling from 2,570 to the current levels of 2,520 is an indication that it will remain in the 2,500-2,550 range in the medium term”.Adding that the 2,500 region presents a very strong support and it’s highly unlikely that the current environment will strengthen beyond that level. Read more

Ms Edigold Monday, the only Ugandan woman to have risen to the position of a managing director (MD) of a top pan-African bank has resigned after serving the banking industry for about two decades.Ms Monday has won the admiration of many including the Central Bank governor, Emmanuel Tumusiime Mutebile who believes that she has left the industry at a time her expertise is handy.“Under Ms Monday’s leadership, Bank of Africa strengthened its financial position with total assets growing by 91 per cent, deposits by 85 per cent, and loans and advances by 74 per cent.The bank also expanded its branch network from 16 branches in 2009 to 33 branches—all well spread across the country,” Mr Mutebile said at the farewell dinner hosted in her honour last week in Kampala. Read more

Uganda’s foreign exchange reserves have increased by $230 million (about Shs584 billion) over the last four months.This, according to Bank of Uganda (BoU), is an equivalent of 4.4 months of future imports of goods and services.This is the highest level in terms of volume of foreign exchange reserves in import cover in the recent years. “The stock of Uganda’s foreign exchange reserves at the end of February 2014 amounted to $3.276 billion, which is an increase from $2.046 billion at end of November 2013,” the executive director of research BoU, Dr Adam Mugume, told the Daily Monitor in an interview recently.Bank of Uganda uses the foreign exchange reserve to intervene in the domestic money market to bring about stability when there are volatilities in the foreign exchange market, which can either be the appreciation or depreciation of the Uganda shilling against the United States (US) dollar.Uganda calculates and keeps all her foreign exchange reserves in US dollars. Read more

Central bank governor, Emmanuel Tumusiime Mutebile, has tipped commercial banks in Uganda on financial inclusion efforts.“Extending financial services will only be possible on a large scale if banks can overcome the cost barriers which are a major obstacle to the wider provision of financial services,” he said.Mutebile was at the launch of Orient bank’s latest branch at Acacia mall in Kampala.He also bemoaned banks’ high operating costs as a share of total assets is too high.  “One of the ways in which costs can be lowered is through the introduction of new technologies for delivering financial services, such as information technology,” he advised.He also reiterated the central bank's commitment to ensuring price stability and a sound financial system. “We shall continue to conduct vigorous financial sector regulation and supervision to ensure that all banks are well capitalized and that they have robust risk management frameworks.” Read more

Central bank governor Tumusiime Mutebile has reassured investors of a stable macroeconomic environment backed by predictable information flow to enable them decide on where and when to invest in Uganda.In a key note presentation at the Uganda Investment Summit at the Speke Resort Munyonyo  Mutebile said the country is undergoing rapid transformation in it financial sector with 25 banks most of which are integrated in the global market. Thus he said has elevated the Ugandan economy to the status of a “frontier market.”“The Bank of Uganda makes public its forecast for inflation one year ahead, we believe that the better the public and the markets understand our monetary policy, the more effective it will be,” noted Mutebile.Inflation, a core macroeconomic factor is critical to investors because high and unstable  inflation wipes away the value of investments which may scare away investors.Current inflation has fallen to 7.1% from a high of over 30% over two years ago. Speaking to a hall packed with global and local investors, Mutebile pointed out that the loan to deposit ratio has risen from 54% in 2003 to 78% today. Read more

A huge chunk of Ugandan corporate business companies are no longer remitting taxes to Uganda Revenue Authority (URA) simply because they are not making profits, said Bank of Uganda on Wednesday. The Central Bank’s Research Director, Dr Adam Mugume, said the “biggest shortfall in tax revenue came from corporate taxes; from institutions making no profit- so they can't pay or remit taxes.” Mugume’s revelations underscore the uneasy climate condition within which businesses are operating in Uganda. His statement also comes against the backdrop of media reports of several leading tycoons losing vast multi-billion properties to commercial institutions due to an unprofitable business atmosphere. Mugume made the remarks at the Central Bank during the release of the monthly monetary policy by Governor Tumusiime Mutebile. The Director of Banking, Ben Ssekabira also noted that the ratio of bad loans to total credit currently stands at 6.9 percent from 4.9 percent in June 2013, implying many borrowers were not able to service their loans.  Read more

Tough times are ahead as the depreciating Shilling pushes up the price of fuel, something that analysts say will see the cost of living go up.Bank of Uganda opening market yesterday placed the dollar at 2560/2570, indicating a more than Shs70 increase compared to what it traded at the beginning of last week.Experts in the market have attributed the depreciation of the local unit to the speculations following the donors’ announcement to suspend aid after the enactment of the Anti-Homosexual Act.In an interview with the Daily Monitor, the Bank of Uganda Director Research, Dr Adam Mugume, said: “It is true the Shilling has lost ground largely because of speculative reasons and also the overshooting behaviour of the exchange rate once the market experiences a slight disruption.” Read more

Reduce lending rates, Mutebile tells banks
Banks across the country have been asked to align their lending rates with the Central Bank rate (CBR).The call by Bank of Uganda Governor Emmanuel Tumusime Mutebile, was made during the official launch of Guaranty Trust Bank (Uganda) Ltd on Monday.Currently, the CBR at which commercial banks borrow money from the Central Bank stands at 11.5 per cent. The weighted average lending rate in the commercial banks currently stands at above 22 per cent.“Bank of Uganda is committed to forcing price stability and ensuring sound financing system. I therefore ask banks to align charges in lending rates to the Central Bank Rate (CBR). These rates are still high and they must come down,” Mr Mutebile said. Read more

The Ugandan shilling weakened on Monday as foreign-owned commercial banks stocked up greenbacks in preparation to make dividend payments abroad, but a scheduled Treasury auction this week was seen limiting the local currency's losses.At 1127 GMT commercial banks quoted the currency of east Africa's third-largest economy at 2,570/2,580, weaker than Friday's close of 2,555/2,565."We've had a lot of (dollar) appetite from banks which I think is being driven by preparations for dividend payments," said Ali Abbas, trader at Crane Bank.Money market analysts say the local currency's medium-term outlook is weak, undermined by concerns over the potential economic impact of aid cuts by western donors. Read more

Increased issuance of treasury bills/bonds and the participation of foreign investors in Uganda’s domestic financial market have caused rates on government securities to rise marginally over the last one month. Bank of Uganda explains the rise as largely a result of the need for increased domestic financing to accommodate the shortfall in revenue and increased government expenditure.The interest rate on the 91 day treasury bill went up from 8.82 per cent in January to 9.41 per cent in February while the 182-day treasury day rates went up from 11.58 per cent to 11.97 per cent in February. The two-year treasury bonds rate went up from 13.4 per cent to 13.72 per cent in February, while the 15-year treasury bond rates went up from 15.15 to 15.25 per cent.Bank of Uganda perspective In an interview with the Daily Monitor last week, the Director Domestic Financial Market Bank of Uganda, Mr Stephen Mulema, said: “I can attribute the increase in yields to the increase in issuance volumes given that the rising trend began when we increased the issuance amounts.” Read more

The Governor Bank of Uganda, Mr Emmanuel Tumusiime Mutebile, has asked African central banks to adopt the inflation targeting monetary policy frameworks, saying it is very effective in controlling the increase in prices of commodities and stabilising interest rates.While delivering his keynote address during the International Monetary Fund and Bank of Uganda conference in Kampala yesterday, Mr Mutebile said: “I strongly believe that it is both feasible and desirable for central banks in Sub-Saharan Africa to modernise their monetary policies and adopt inflation targeting frameworks.” Read more

African Central Bank governors are scheduled to meet in Kampala, Uganda early next week with a view to improve their economies’ monetary policies.The meeting slated for March 17 to 18, will allow the continent’s governors to chart a way forward in implementing a modern monetary policy that has been recommended by International Monetary Fund (IMF) to mitigate both internal and external risks in their economies.African countries are experiencing challenges to realise stable monetary policies framework in their economies because of evolving risks that come with internal and external shocks in the economy, hence the need for modernising of monetary policy frameworks.The high level two-day conference on Modernising Monetary Policy Frameworks in Low Income Countries (LICs) is being organised by the IMF and the Bank of Uganda, with support from the UK’s Department for International Development and it will be held at Speke Resort Munoynyo. Read more

The Central Bank has kept its key lending rate at 11.5 per cent for the second consecutive time, saying the country needs a flexible environment to support low lending rates.Uganda’s economy is experiencing positive and negative conditions emanating from both domestic and external pressure, which the Bank of Uganda says needs a balanced policy stance to ensure stability in the economy. The decision to retain the Central Bank Rate - the rate at which commercial banks borrow money from the Central Bank - is aimed at consolidating the gains made to stabilise the Uganda Shilling which has been sliding on the back of donor aid cuts.The move also shrinks the likelihood of a reduction in the cost of loans, since commercial banks use the CBR to set interest rates. Read more

The Shilling is losing stance against the United States dollar after the news of donors suspending aid to Uganda following the signing of the ant-homosexually Act.Earlier in the week, the Shilling had slightly strengthened against the dollar in the trading following the Central Bank’s withdrawal of excess liquidity coupled with reduced dollar demand from the corporate sector.The Central Bank withdrew Shs397 billion through a seven-day repurchase agreement made on Tuesday but this has had a short-live effect.Responding to the sudden trend for a local unit which had been stronger and stable since the beginning of the year, Bank of Uganda director of research Adam Mugume said: “Some donors have indicated that they will cancel aid to Uganda. This news has sent shocks, resulting in a spike in the exchange rate depreciation”. Read more

The Ugandan shilling was steady on Wednesday and was expected to appreciate in the days ahead as the central bank mopped up liquidity and dollars flowed in from offshore investors buying debt.Commercial banks quoted the currency of east Africa's third-largest economy at 2,453/2,458, little changed from 2,452/2,457."The repo that the central bank did today coupled with suppressed demand for dollars will give the shilling a bullish tone going forward," said David Bagambe, a trader at Diamond Trust Bank. "However, the shilling will also derive a bit of energy from inflows from foreign investors who are targeting Ugandan debt."Bank of Uganda, the country's central bank, issued a seven- day repo that was taken at 11.5 percent. It did not disclose how much it sucked out of the market. Read more

The Central Bank of Uganda  pegged lending rates at 11.5 percent, the lowest since 2011 when the apex bank tightened monetary policy to control skyrocketing inflation.The move came in anticipation of a surge in inflation rates. Uganda’s annual core inflation rate dropped to 4.6% in January from 5.7% in December, according to data from the country’s bureau of statistics.“Although core inflation has decelerated, helped by recent Ugandan shilling appreciation, food prices  which have risen strongly in recent months – are still a concern,” Standard Chartered economist Razia Khan said in a note.The central bank’s deputy governor, Louis Kasekende fears that the conflict in South Sudan, which he blames for some of Uganda’s economic troubles, if sustained could plunge Uganda into further economic misfortune. Read more

The Uganda Shilling has gained some ground against the dollar since the beginning of the year -a stance experts say has gone beyond their prediction.Yesterday, data from Bank of Uganda (BoU) showed the Shilling was trading between 2481/2491 by opening of business, a stronger standing than what was experienced at the beginning of the year when it traded at 2520/2530.Experts attribute the strength to the increase in exports from the country especially coffee - the country’s leading export commodity. Read more

 The Bank of Uganda has maintained its lending rate (central bank rate) to commercial banks at 11.5 per cent, unchanged from last month.The central bank cited the likelihood of slightly high inflation levels in the medium-term as the reason for maintaining the rate.The current macro-economic outlook by the Bank of Uganda forecasts suggests inflation will go down further in the coming months, driven by improved food crop harvests, but rise to 6.5 - 7.5 per cent during the latter part of the year. Read more

Kampala- Ugandan traders will be able to transfer money across borders in the East African region within a day thanks to a new initiative that has inter-linked the region’s central banks.The initiative which is part of the projects by the East African Community member states to grow their capital markets has taken effect in Uganda, Kenya and Tanzania while Rwanda and Burundi are expected to join later.The East African Cross Border Payment System (EAPS) will use the Real Time Gross Settlement system (RTGS). Read more

 BOU Marginally Reduces Key Lending Rate to 11.5 Percent

Bank of Uganda today (Dec. 3) announced a marginal fall in the central bank rate (CBR) by 50 basis points from 12% in November, 2013 to 11.5% in December.While announcing the new rate before the media, Central Bank Deputy Governor, Louis Kasekende said the reduction was based on recent inflation numbers released by Uganda Bureau of Statistics at the end of November.Read more

Uganda's bond sale this week, its last scheduled sale of the year, is likely to receive a mixed reception as the central bank offers the popular three-year bond alongside the less sought after 15-year paper.The Bank of Uganda will sell 80 billion shillings each in the three- and 15-year issues on December 4.Low appetite is expected for the latter, with demand mainly from pension funds."The three-year will be well received. There's quite a bit of money in the system," said a trader. "The 15-year, I don't think the reception will be that great given the tenor."The yield on the three-year bond is likely to remain at current levels of 14-14.5 percent, where it is currently trading on the secondary market, the trader said. Read more

Commercial banks in Uganda are now reporting non-performing loans (NPLs) broken down by currency, complying with the regulator’s move to cushion the lenders against currency fluctuations.Bank of Uganda (BoU) in its financial stability report for the period ended June 2013 said that it was monitoring the growth of foreign currency-denominated loans to reduce risks associated them.“The BOU has strengthened its monitoring and surveillance of factors which might pose potential risks to the banking system. Read more

The Bank of Uganda agreed with the objective and the proposed amendments in the newly tabled Finance Bill 2012, saying the amendments will go a long way in strengthening the management of economic and financial matters of the economy. Presenting the Bank’s views on the Bill currently being scrutinized by the finance committee, the Deputy Governor, Dr Louis Kasekende, said the Bill will also ensure macroeconomic stability, economic growth and national development plans when setting fiscal objectives within the macroeconomic framework.“Specifically the amendments also look to commit the Government to efficient management of the oil revenues,” he told the committee chaired by the Kyadondo County North MP, Robert Sebunya. Read more

High interest rates on loans from commercial banks have resulted into losses on the side of traders.Commercial banks increase the prime lending rates and interest rates per year.Business community and individuals have been forced to reduce on their lending-borrowing capacity due to the fear of making losses as their securities are taken up by commercial banks on failure to pay back the loans fully. Read more

Low earnings from exports and higher import prices have led to deterioration in Uganda’s current account deficit by $178.8 million (about Shs450.879 billion) during the quarter that ended July to September 2013.Bank of Uganda says the deterioration has seen the total volume of Uganda’s current account deficit increasing to $559.2 million (about Shs1.410 trillion) during the quarter ending September 2013 from a $380.4 million (about Shs959.254 billion) deficit in the previous quarter. Read more.

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BoU: Borrowers await good news as Uganda, Kenya central banks meet
The central bank Monetary Policy Committees (MPC) of both countries are expected to meet on Monday and Tuesday to set the Central Bank Rate (CBR). Ordinarily, commercial banks should use the CBR to benchmark the interest they charge customers. Read more

Uganda’s central bank held its benchmark lending rate at 11 percent on Tuesday, citing renewed inflationary pressure. Bank of Uganda Governor Tumusiime Mutebile. Policymakers said the bank Read more

Bank of Uganda projects slight rise in inflation  

The Central bank managed to achieve its target of stemming inflation to a single digit for the 2012/13 financial year.  For the year ended June 30, 2013, core inflation was at 5.5 per cent, which is within the bank’s average target, down from the double digit inflation in June 2012. While presenting the monetary policy statement earlier this week, Governor Emmanuel Tumusiime-Mutebile said their forecasts show core inflation will rise slightly but fall again after about three months.  Read more