By Nicholas Bariyo
KAMPALA, Uganda--Uganda's central bank held its benchmark lending rate at 6.5% on Thursday as the coffee-producing country steps up efforts to spur growth after the economic disruption caused by the surge of coronavirus infections.
The central bank has kept the rate at record lows since the middle of last year in an effort to boost an economy that is reeling from the effects of one of Africa's toughest lockdowns. Battered by Covid-19 containment measures, Uganda's economy contracted 1.1% during 2020, compared with growth of 6.8% the previous year.
"The Covid-19 restrictive measures will continue to weigh on economic activity," said Emmanuel Tumusiime-Mutebile, central bank governor.
"In particular, between Covid-19 stops and starts, tourism is unlikely to return to normal levels any time soon," he said.
Uganda, which exports more coffee beans than any other nation in Africa, imposed a six-week lockdown in June to contain rising coronavirus infections, which are being attributed to the spread of the more contagious delta variant, now the dominant strain across many African countries.
The Bank of Uganda expects the economy to start recovering when vaccinations start picking up in the latter part of the year. Less than 1% of Uganda's 42 million population is fully vaccinated.
Growth could return to some 6%-7% by 2024, when oil companies start commercialization of the country's vast crude reserves, estimated to contain some 6.5 billion barrels of crude, the central bank said.
Work on a 900-mile export pipeline from Uganda's remote region near the border with Congo to the Indian Ocean has already commenced. France's TotalEnergies SE is expected to start oil production in early 2025 and could peak at around 230,000 barrels of crude a day.
Write to Nicholas Bariyo at nicholas.bariyo@wsj.com
(END) Dow Jones Newswires
08-12-21 0805ET
