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Coronavirus: BoU announces key stimulus measures to save the economy
The Governor Bank of Uganda, Mr Emmanuel Tumusiime Mutebile. FILE PHOTO
What you need to know:
Since Uganda is not an island due to the power of globalisation which has now made the world one village, Mr Mutebile explained that volatility in the global financial markets has resulted in offshore investors exiting the frontier and emerging markets including Uganda, into a safe, havens, stressing that these factors pose a risk to financial stability and overall economic growth.
Like other central banks and governments around the world have said, Mr Mutebile said the BoU will continue monitoring the loving impact of COVID-19 and shall take additional measures as is necessary to mitigate the economic effects of this pandemic.
The Bank of Uganda has announced seven key measures as stimulus measures to safeguard Uganda’s economy from the prevailing impact of coronavirus on the economy.
The seven key measures seek to make the cost of money for the business community and commercial banks low.
In a statement issued on Friday, the Governor Bank of Uganda, Mr Emmanuel Tumusiime Mutebile, said that although Uganda has no known coronavirus case, the impact of coronavirus outbreak on the economy is already visible.
Mr Mutebile expressed fear that given the evolving situation, it is difficult to predict the extent and severity of the impact of the coronavirus pandemic, spelling that in the meantime, in order to limit the impact of the coronavirus on the stability and economic growth, Bank of Uganda will undertake the following:
Ensure that financial institutions supervised by the BoU continue to operate effectively.
Ensure that contingency plans by financial institutions guarantee the safety of customers and staff.
Intervene in the foreign exchange market to smoothen out excess volatility arising from the global financial markets.
Put in a place a mechanism to minimise the likelihood of sound business going into insolvency due to lack of credit
Provide exceptional liquidity assistance for a period of up to one year to financial institutions supervised by BoU that may require it
Waive the limitation on the restructuring of credit facilities at financial institutions that may be at risk of going into distress due to the coronavirus pandemic.
Continue to engage Mobile Network Operations (MNOs) and commercial banks to further reduce fees on mobile money transactions and other digital payment charges in order to limit the use of cash and bank branch visit. Increase daily transaction and wallet size limits for mobile money transactions.
“Manufacturers and traders who rely on supplies, especially from China and Europe, are facing challenges. Tourism, a major source of major foreign exchange earnings are shrinking on account of declining demand, and expanding restrictions travel to and from a growing number of countries abroad and oversea,” Mr Mutebile said.
Globally, the financial system has been shaken and already hit hard to the extent of forcing the major central banks in the world like the Federal Reserve (USA), European Central Bank, Bank of England and Bank of Japan among others to cut interest rates on policy rate and committed to providing stimulus measures to save their economies from going into recession.
Since Uganda is not an island due to the power of globalisation which has now made the world one village, Mr Mutebile explained that volatility in the global financial markets has resulted in offshore investors exiting the frontier and emerging markets including Uganda, into a safe, havens, stressing that these factors pose a risk to financial stability and overall economic growth.
Like other central banks and governments around the world have said, Mr Mutebile said the BoU will continue monitoring the loving impact of COVID-19 and shall take additional measures as is necessary to mitigate the economic effects of this pandemic.
