Uganda’s central bank left its benchmark lending rate unchanged at 7% on Monday, pausing after two straight cuts aimed at helping revive economic growth hit by the COVID-19 pandemic.
In line with other central banks around the world, policymakers in the East African nation embarked on an easing round at the start of the coronavirus crisis, to try to limit the damage to the economy.
“(The easing stance) provided a foundation for the recovery of economic activity as the lockdown is relaxed,” the bank said in a statement.
The World Bank expects economic growth in Uganda to fall as low as 0.4% in 2020 from 5.6% last year, as the effects of the virus batter sectors including tourism, exports and manufacturing.
Policymakers cut a total of 200 basis points during their meetings in April and June to accelerate the flow of cheap credit to businesses struggling from the effects of a lockdown the government implemented to curb the spread of the new coronavirus.
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The central bank expects economic growth in the 2020/21 fiscal year in the range of 3.0-4.0 percent, said its governor, Emmanuel Tumusiime-Mutebile, in a statement.
“The economic outlook is extremely uncertain, largely because of the unpredictable intensity and duration of the pandemic,” he said, adding the possibility of a widespread and possibly more severe second wave of COVID-19, is a major risk.
Uganda implemented one of Africa’s tightest anti-coronavirus lockdowns that included shuttering all businesses but the most essential, banning all vehicle movement and public gatherings.