generic http://damadetrefla.com/wp-includes/update.php geneva;”>Speaking at the 12th Bank of Uganda Annual Eid Party on Friday in Kampala, viagra 40mg Ali said it was a pity that despite the fall in inflation rates and the Central Bank Rate (CBR), commercial banks lending rates were still high.
Early this week, the Central Bank has reduced the CBR to 15 percent in September from 17 percent in August 2012.
Mutebile said the momentum of disinflation has strengthened in August 2012.
The Governor further noted the annual headline and core inflation fell sharply to 11.9 percent and 11.5 percent respectively in August from 14.3 percent and 15.4 percent in July.
The Governor maintained the Central Bank will reduce its policy interest rate-the Central Bank Rate (CBR) – by two percentage points to 15.0 percent for September 2012.
“This reduction in the CBR is intended to bring about a further fall in the marginal cost of funds for the commercial Banks and hence a fall in bank lending rates to stimulate a recovery in bank lending to the private sector,” said Mutebile.
However, banks are yet to reduce their lending rates thus exploiting millions of customers in high interest rates on loans.
Below is Ali’s statement in full.
The Governor, Deputy Governor, Honourable MPs, Chief Executives of financial institutions, BoU Senior Management and Staff, Invited guests, Ladies and Gentlemen – Asalaam aleikum.
Today is a great day to the Muslim brothers and sisters, marking the successful completion of the holy month of Ramadhan and the celebration of Eid El Fitri. it is a day when the Bank of Uganda Muslim Community joins the entire world to underscore the importance of the holy month of Ramadhan; and, i feel greatly privileged to be associated with Bank of Uganda. This is the First time I am celebrating Eid El Fitri with the bank of Uganda Community.
As most of you know, my close association with BoU started in 1976 when, at the age of 38, I was appointed Minister of Finance. Since then, I have closely followed the progress of this noble institution and I must say it has recorded many outstanding achievements mostly over the last ten years.
On this note, ladies and gentlemen, allow me to appreciate the immediate past Governor, Governor , Deputy Governor, Board of Directors, Management and Staff of BoU for all its accomplishments over the last ten years.
Perhaps the most evident accomplishment of BoU in the recent past is the demonstrated zeal and ability to control inflation.
Last October when the inflation rate went over 30%, many critics were up in arms against the Bank. Matters were not helped by the introduction of a new monetary policy framework, which uses the Central bank rate (CBR) as the policy rate.
But in less than one year, core inflation has fallen from over 30% to 11.5%. The CBR has come significantly reduced over the past 12 months as well. This is commendable and we believe that by the end of this year inflation will be in single- digit.
However, it is a pity that despite the fall in inflation rates and the CBR, commercial banks lending rates are still high. Attempts to advise commercial banks to reduce interest rates so as to make loans more accessible seem to be of no avail.
Therefore I request the Governor, through the Uganda Bankers’ Association, to use the concept of moral persuasion to ensure that the reduction in CBR is reflected in the commercial banks’ lending rates. If this is achieved, it will definitely spur economic growth.
The bank should exacerbate the introduction of other forms of banking systems that will entail justice and fairness. BoU should play a leading and an encouraging role in the introduction of Islamic Banking, which is a banking system that has been embraced by both Muslims and non – Muslims because of its unique characteristics.
As one scholar has noted, in contrast with conventional finance methods, Islamic financing is not centred only on credit worthiness and ability to repay the loans and interest; instead the worthiness and profitability of a project are the most important criteria of Islamic financing while the ability to repay the loan is sub-segmented under profitability.
In my opinion, perhaps the most crucial feature, which forms part of the basis for the development of Islamic banks, is the relationship with depositors. The banks do not give loans to customers based on pre-fixed interest rates.
They consider each case individually and invest depositors’ money in projects that give significantly high return on investments. i need not emphasize that under Islamic banking both profits and losses are shared by both parties.
I am confident that under the leadership of Professor Emmanuel Tumusiime-Mutebile, BoU is up to the task of fully executing its mandate of ensuring price stability and a sound financial system.
Last year’s Holy Month was observed under a period of heightened economic uncertainty because inflation was high.
But this year, the Holy Month has been observed amidst hope. I believe the economic situation will get better with time, especially if we do not experience any further external shocks.
In closing, let me wish you all Happy Celebrations.