Uganda’s central bank said it stands ready to act if the World Bank’s decision to halt new funding over the country’s passage of anti-LGBTQ legislation impacts the currency further.
(Bloomberg) — Uganda’s central bank said it stands ready to act if the World Bank’s decision to halt new funding over the country’s passage of anti-LGBTQ legislation impacts the currency further.
Speaking in an online briefing after the bank’s first rate cut since June 2021, Deputy Governor Michael Atingi-Ego said officials would do “what it takes to stabilize the exchange rate.” The shilling has dropped around 3% since the World Bank said it would suspend new funding because the legislation signed into law in May contradicts its values.
Read more: World Bank Halts New Funding to Uganda Over Anti-LGBTQ Laws
Earlier on Tuesday the bank’s monetary policy committee cut rates by 50 basis points to 9.5%.
The governor attributed its decision to moderating inflation and the need to support softer economic growth. Annual headline and core inflation, which strips out food and energy costs, decelerated to 16-months lows in July of 3.9% and 3.8% respectively.
The central bank targets inflation at 5% over the medium term.
The bank said it expects the economy to grow in a range of 5% to 6% in the year through June, compared with its previous estimate of 6% to 6.5%.
World Bank
“Until we get firm information from the Ministry of Finance regarding the exact amount of resources which are affected, it would be improper for me to speculate,” he said.
“But fundamentally speaking, we know that aid to Uganda is one of the factors which affect the exchange rate,” he said.
Undisbursed loans at end-December stood at $4.81 billion of which the World Bank made up 29%, followed by the International Monetary Fund at 16%, African Development Bank Group at 14% and other lenders the rest, Kampala-based Civil Society Budget Advocacy Group said in a statement.
–With assistance from Rene Vollgraaff.
(Tweaks copy throughout)
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