The Central Bank of Uganda is worried about the declining demand for commodities on the market which has been attributed to government’s increased financing of projects through foreigners who repatriate all the profits leaving Ugandans with no money to purchase.
The monetary policy statement of October showed a reduction in demand for consumer products as people selling continue to struggle finding buyers.
The Bank of Uganda Director Research Adam Mugume has attributed the low demand to the fact that imports have remained stronger than exports and high lending rates which has reduced personal loans.
“Most government projects are being given to foreigners like the roads construction and these after go will all the money,“ Mugume explained.
It is here that Bank of Uganda decided to lower the central borrowing rate to 9% from the recent 10% following the slow economic growth that has been registered in 12 months to August.
The committee decided to reduce the CBR by 1% point to 9% in response to the expected path of macroeconomic indicators and international economic environment.
Prof. Emmanuel Tumusiime adds that economic activities seem to have loosened in the first half of 2019 compared to the half of 2018.
The recently released quarterly GDP estimated by UBOS indicated that GDP slowed in the second half of the financial year.mutebile
In the last 12 months to October, there has been a reduction in foreign direct investments by 16% coupled with weakening of the financial accounts which would be related to the delayed oil and gas activities in the 12 months to October.
However, the bank has further warned that the widening fiscal and account deficits coupled with the public sector domestic financing needs could exert more pressure on the economic growth of the country.