Uganda’s multi-pronged approach to revive economy

Key facts and figures (Source: BoU MPR for October)

• Lending interest rates fell in quarter to August 2021 to an average of 17.2% from 18.80% in the quarter to May 2021
• Month-on-Month however, lending rates increased in August 2021 to 18.3% from 16.3% in the previous month driven by loan extensions to the trade, and household sectors.
• PSC growth picked momentum in the quarter to August 2021, partly due to the easing of lockdown in July 2021, accommodative monetary policy stance and credit relief measures.
• In the quarter to August 2021, PSC grew by 9.44% compared to 7.37% in the quarter to May 2021.
• Less net capitalised interest, PSC grew by 9.7% in the quarter to August 2021 from 7.3% in the quarter to May 2021 while capitalized interest fell to a total Shs181.4bn from Shs298.0bn over the same period.
• Net of revaluation, total PSC grew by 10.9% in the quarter to August 2021 from 9.2% in the quarter to May 2021.
• Net of valuation foreign currency loans grew by 7.1% relative to 7.5% in the previous quarter.
• Value of loan applications fell to Shs3.86 trillion in the quarter to August 2021 from Shs5.41tn in the quarter to May 2021, reflecting reduced demand due to the slow pace of economic recovery.
• Value of loan approvals also fell to Shs2.26trillion in the quarter to August 2021 from Shs2.36tn in the quarter to May 2021 as lenders exerted caution driven by lockdown measures.
• Data indicates that loans to the personal and household, agriculture, manufacturing, trade and building-mortgage-construction and real estate sectors continued to be the main drivers of PSC growth
• The Shilling/USD exchange rate appreciated by 4.12% (year-o-year) and by 0.9% (month-on-month) to a mid-rate of Ushs3,530.63 per USD in September 2021, from an appreciation of 5.2% (year-on-year) and 2.8% (month-on-month) in the quarter to June 2021.

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