The Pre-Election Economic and Fiscal Update issued by Moses Kaggwa, the Acting Director Economic Affairs says that the approved and disbursed loans led to a cumulative stock of 17.221 trillion in September, 2020.
Manufacturing sector received more money from banks in May 2020
A report by the Ministry of Finance, Planning and Economic
Development indicates that Banks gave out loans worth 2.65 Trillion Shillings
to the private sector in the first quarter of the financial year 2020/2021.
The Pre-Election Economic and Fiscal Update issued by Moses Kaggwa, the Acting
Director Economic Affairs says that the approved and disbursed loans led to a
cumulative stock of 17.221 Trillion Shillings in September 2020.
This translates into a growth of 1.4 percent in the stock of outstanding
private sector credit over the quarter.
Kaggwa attributes the growth in credit to partly, the easing of prudential
regulations by the Central Bank to mitigate the adverse impact of Covid-19
pandemic on lenders and borrowers.
“Such interventions included the issuance of waivers on limitations associated
with the restructuring of credit facilities, and providing exceptional
liquidity assistance for a period of up to one year to financial institutions
supervised by Bank of Uganda that may require it,” he says.
As at September 2020, Ministry of Finance says that Non-Performing Loans (NPLs)
to total gross loans stood at 5.15 percent, a reduction from 6.01 percent
recorded in June 2020.
The report release is hinged on the provisions of the Public Finance
Management Act (PFMA) 2015 under Section 19 (1) (a) that requires the Minister
of Finance to Publish a pre-election economic and fiscal update not earlier
than four months before the polling day for a general election.
This report by the Ministry of Finance follows another recently released by the
Bank of Uganda (BoU) on the Quarterly Financial Stability Review. This
indicated that banking institutions had from April 2020 to September 2020
restructured loans with clients worth 6.7 Trillion Shillings after repayments
were affected by the Covid-19 pandemic.
The Central Bank in April 2020 granted permission to all banking institutions
to provide credit relief through the restructuring of loans of both corporate
and individual customers who were or would be affected by the COVID-19
The objective was to safeguard financial stability and alleviate
the impact of the COVID-19 pandemic on the financial sector and economic
growth. The benefiting sectors from the credit relief include that of trade,
real estate, manufacturing and transport which were the hardest hit by the