EXCLUSIVE: Mutebile Defies M7 On Interest Rates


health this site geneva; font-size: small; mso-bidi-font-family: ‘Courier New’;”>Held between October 16 and 23, pills buy the retreat was chaired and its resolutions endorsed by President Yoweri Museveni. All NRM MPs, information pills including Ministers, attended.

At some point, according to MP Capt. Mike Mukula, Bank of Uganda Governor Tumusiime Mutebile attended.

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“Mutebile was dressed in his kaunda suit, not military attire like the rest. He enlightened MPs on Uganda’s fiscal policies,” Mukula told a few days ago.

Obtained exclusively by this investigative website, the details of the retreat are absolutely scary and hair-raising.

We shall serialise the details for purposes of emphasis on several controversial resolutions.

In one of the resolutions, MPs agreed that Bank of Uganda must urge commercial banks to have a fixed interest rate despite the soaring levels of inflation.

“The caucus urges a particular priority for the Central Bank to urge commercial/retail banks to implement a fixed interest rate policy on salary loans so that ordinary working Ugandans are able to plan their financial commitments with some stability,” resolution 2, under the topic of Monetary Policy, Inflation and Growth, reads in part.

“The Caucus urges Government to utilize fiscal measures as a concurrent tool for dealing with inflationary pressures, accompanied by prioritizing public expenditure alongside the continued drive for increased productivity and growth in the economy in the medium and long terms,” MPs further concurred.

However, Mutebile, on November 1, ignored the NRM resolution, saying the Central Bank had increased the interest rates from 20 percent in October to 23 percent in November.

He explained the hike was aimed at stemming the spiralling inflation that hit a record 30.5 percent by close of October.

“The priority of the Central Bank is to protect inflation from being entrenched. This applies particularly to non-food prices which are much more influenced by demand conditions in the economy than are food prices,” he said.

“It’s necessary to cool the growth of aggregate demand in the economy if inflation is to be brought down over the next 12-18 months,” Mutebile explained.

The MPs partly agreed with Mutebile, saying, “The Caucus supports careful and prudent utilization of interest rates by the Bank of Uganda, as an instrument for controlling inflation in the short term.”

However, MPs observed, Commercial Banks should maintain interest rates fixed pending “a multi-sectoral/multi-discipline task force or committee, to include the Central Bank and private sector among other stakeholders, is constituted to study the matter further.”

The increased interest rates have weighed down on fixed earners who borrowed money from banks and were meant to re-pay over a long period of time.

Needless to say, the increased costs of production coupled with high interest rates have also compelled companies to ignore credit and lay off workers to keep afloat. This has worsened the rate of unemployment in the country.

However, Deputy Secretary to Treasury Keith Muhakanizi says if the interest rates were not hiked, the economy would be on its knees.

“We have no option because we must seriously deal with this animal called inflation,” said Muhakanizi.


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