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Business & Finance

Uganda central bank holds key lending rate, says economy has lost momentum

  • The bank said "The economic upturn is proceeding at an uneven pace" as anti-coronavirus measures continue to weigh on economic activities like education, hospitality and tourism.
  • Uganda had one of Africa's tightest anti-coronavirus lockdowns, including a near-total shutdown of all businesses but the most essential.
15 Feb 2021

KAMPALA: Uganda's central bank kept its key lending rate at 7% on Monday, saying the pace of economic recovery had lost momentum since its last monetary policy meeting in December.

The bank said "The economic upturn is proceeding at an uneven pace" as anti-coronavirus measures continue to weigh on economic activities like education, hospitality and tourism.

"The economic recovery has somewhat lost momentum," the bank said in a statement.

Uganda had one of Africa's tightest anti-coronavirus lockdowns, including a near-total shutdown of all businesses but the most essential. The measures have since been relaxed but some remain.

Economic growth in the quarter to December slowed to 2.6% year-on-year compared with 9.2% in the quarter to September 2020, the bank said.

Adverse weather, weak private-sector credit growth, increasing non-performing loans that could result in higher lending rates, the bank said, could further undermine growth.

The bank also said it would extend for six months several economic stimulus measures, including liquidity support to commercial banks it implemented last year to try to cushion the country's banking system from the effects of COVID-19.