Overview:
Regarding credit extensions, the report reveals that a total of Shs1,443.5 billion was extended to the private sector by lending institutions in July 2024. This represents an increase from Shs1,360.9 billion the previous month.
KAMPALA– The Finance Ministry’s Performance of the Economy Monthly Report for August 2024 has revealed a marginal increase in commercial banks’ weighted average lending rates for Shilling-denominated credit.
According to the report, the rates increased from 17.64% in June 2024 to 17.76% in July 2024. Similarly, foreign currency-denominated credit rates rose from 9.23% in June to 9.62% in July.
“These rates remained within close range of their average lending rates within the last year,” the report states.
The report also notes that the stock of outstanding private sector credit increased by 1.5% in July, from Shs21,905.82 billion in June to Shs22,243.07 billion.
“This growth was driven by a rise in both Shilling and foreign currency denominated credit,” the report explains. “The Shilling-denominated credit increased from Shs15,615.85 billion in June 2024 to Shs15,824.78 billion in July 2024.”
The rise in Shilling-denominated credit is attributed to higher lending to the electricity and water sector, and the business services sector.
In addition, foreign currency denominated credit increased from Shs6,289.98 billion in June 2024 to Shs6,418.29 billion in July 2024.
Regarding credit extensions, the report reveals that a total of Shs1,443.5 billion was extended to the private sector by lending institutions in July 2024. This represents an increase from Shs1,360.9 billion the previous month.
The approval rate for July was 70.1%, compared to 66.0% the previous month.
“Personal and household loans accounted for the biggest share of loans extended to the private sector, accounting for 28.4% of the total credit approved,” the report says. “This was followed by the trade sector at 21.4%, and the agricultural sector at 13.7%.”
The Bank of Uganda recently reduced the Central Bank Rate (CBR) to 10.00% from 10.25% on August 7, 2024. This move was attributed to the continued decline in inflation below the medium-term policy target of 5%.
“The reduction is due to the fading impacts of global shocks like the war in Ukraine and COVID-19, alongside the relative stability of the shilling against the US dollar,” the report adds.