Bloomberg News

Uganda Cuts Benchmark Rate Ninth Time This Year to Spur Growth

December 04, 2012

Uganda’s central bank cut its benchmark interest rate for the ninth time this year to stimulate borrowing and spur economic growth.

The Bank of Uganda lowered the policy rate to 12 from 12.5 percent, Governor Emmanuel Tumusiime-Mutebile told reporters today in the capital, Kampala. The median estimate of four economists surveyed by Bloomberg was a reduction of 25 basis points.

The central bank lowered borrowing costs by 10.5 percentage points in the first 10 months of the year, reversing last year’s rate increases. Growth slowed to 3.2 percent in the year through June from 6.7 percent in the previous 12 months, according to the Uganda Bureau of Statistics. The economy will probably expand 5.4 percent this fiscal year, it said.

Inflation in the East Africa’s third-biggest economy accelerated for the first time in nine months in November to 4.9 percent from 4.5 percent in October after prices of some food items rose, the Uganda Bureau of Statistics said on Nov. 30.

Uganda is a new frontier for investments after London-based Tullow Oil Plc (TLW) and partners discovered oil in the nation. The U.K. explorer is jointly developing the country’s oilfields estimated at 3.5 billion barrels with China National Offshore Oil Corp. and France’s Total SA. (FP) Total says production of significant volumes will start in 2017.

To contact the reporter on this story: Fred Ojambo in Kampala at  fojambo@bloomberg.net.

To contact the editor responsible for this story: Paul Richardson in Nairobi at pmrichardson@bloomberg.net


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