Africa-Press – Uganda. For the second time the cost of credit rose in May, resulting from sustained tightening of the monetary policy space.
In June, Bank of Uganda stayed the Central Bank Rate (CBR) at 10 percent for the third month due to existing economic risks.
In the June performance of the economy monthly report, the Ministry of Finance said average lending rate for shilling-denominated credit increased to 20.14 percent in May from 19.27 percent in April, while interest foreign currency-denominated credit rose from 8.11 percent in April to 8.5 percent in May.
“The elevated lending rates are reflective of the pass-through effects of the continued tight monetary policy stance,” the report noted, but, however, noted that the stock of outstanding private sector credit had increased by 0.32 percent, rising to Shs20.5 trillion from Shs20.4 trillion in April.
Of this, at least Shs14.1 trillion was shilling-denominated credit, while Shs6.3 trillion was foreign denominated.
During the period, private sector credit increased despite the prevailing high lending rates, rising to Shs1.5 trillion from Shs1.1 trillion, which represented an approval rate of 67.6 percent in comparison to 69.8 percent in April 2023.
Manufacturing, accounted for the largest share of credit extended to the private sector at 23.8 percent, taking up Shs371.1b of extended credit.
Personal and household loans, trade and building, construction and real estate took up 20.6 percent (Shs320.9b), 15.9 percent (Shs247.5b and 15.2 percent (Shs236.6b), respectively.
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