Bank of Uganda has warned that if government does not stick to its agreed projected borrowing from the domestic market, it will undermine the efforts of reviving the economy.
This was during the press briefing in which the BOU announced a cutting of the central bank rate a benchmark against which commercial banks set their own interest rates 10%, the lowest it has ever been.
“With domestic inflation pressures remaining subdued, and giving the continued weak prospects for economic growth, the bank of Uganda judges continued easing of monitory policy is appropriator,” the governor bank of Uganda, Emanuel Tumusiime Mutebile remarked.
This therefore means that banks are expected to follow by continuing to lower their interest rates with the lowest known rates of borrowers at about 19%.
According the the Executive director, Researc Bank of Uganda, if the government is borrowing in the range of range of 15-17%, it automatically means that the banks will prefer to lend money to government than private individuals.