The Bank of Uganda has granted exceptional permission to commercial banks and other financial institutions it supervises to restructure loans of corporate and individual customers affected by covid-19.
According to the banks governor Prof Tumusiime Mutebile, the restructuring of the loans involves a postponement on loan repayment for borrowers at the will of the institutions for up to 12 months effective 1st April, 2020.
Mutebile has also directed all its supervised financial institutions to defer payment of all optional distributions such as dividends and bonus payments for at least 90 days effective March, 2020 depending on the evolution of the covid-19 pandemic.
He meanwhile says the pandemic has seen a depreciation of the Ugandan shillings against the US Dollar by 2.2% between February and March, 2020.
The governor has however pledged to monitor the current situation and the evolving market and macroeconomic conditions in case of any additional liquidity support if need arises.
Bank of Uganda (BoU) has also reduced the Central Bank Rate (CBR) to 8 percent to stem the effects of coronavirus on the economy.
The lending rate for the month of March was at 9 percent but ever since, the central bank says the COVID-19 pandemic has led to a severe contraction in economic activity due to global supply chain disruptions, travel restrictions, measures to limit contact between persons, and the sudden decline in demand.
“Consumer-facing sectors have been severely affected by social distancing measures and heightened uncertainty, while the manufacturing sector has declined on account of disruptions to the inflow of raw materials,” BoU Governor Emmanuel Tumusiime-Mutebile said in a statement issued on Monday, April 6.
“The band on the CBR will remain at +/-3 percentage points and the margin on the rediscount rate and bank rate will remain at 4 and 5 percentage points on the CBR, respectively. Consequently, the rediscount rate and the bank rate will be 12 percent and 13 percent, respectively,” he added.
BoU has also directed Supervised Financial Institutions (SFIs) to defer the payments of all discretionary distributions such as dividends and bonus payments for at least 90 days effective March 2020, depending on the evolution of the pandemic.Download Our News App Here