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Uganda: Bou Must Continue to Support Recovery – IMF

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Bank of Uganda will need to maintain an accommodative monetary to help the economy recover from headwinds resulting from Covid-19, according to the International Monetary Fund (IMF).

Speaking on the side line of the Spring Meetings of the World Bank and the IMF, Dr Tobias Adrian, the IMF financial counsellor and director monetary and capital markets department, said recovery from Covid-19 disruptions is going to be slower, which could put financial stability at risk.

Therefore, he said, there was need for the Central Bank and government to continue with accommodative money policies as a way of shaking off shocks.

“Every country has been hit by Covid-19. Of course, economic headwinds from the global economy have hit Sub Saharan Africa hard, and countries have been depressed, even when the medical conditions might have been less severe than elsewhere,” he said, noting, monetary policies will need to remain accommodative as well as encouraging policy to act swiftly to prevent financial vulnerabilities from becoming entrenched and turning into legacy problems.

The Central Bank has since last year maintained a low Central Bank Rate as way of supporting economic recovery and keeping down interest rates.

It has also put in place a number of measures that seek to cushion banks and customers from the stress of slowed economic growth that had threatened to force an increase in non-performing loans.

The Central Bank also recently extended the loan restructuring window, allowing commercial banks to renegotiate payment terms for loans of distressed customers and businesses.