The Central Bank as a Restraint: the Experience of Uganda

Abstract

Uganda has made impressive progress over the last ten years, registering East Asian tiger-like growth rates. In part, this growth can be attributed to the ‘peace dividend’ as the social structure, which had been horrifically disrupted, returned to normal. In recent years the authorities have demonstrated their commitment to maintaining macroeconomic stability and this has undoubtedly contributed greatly to Uganda’s success. But economic performance was not always this good. Through the late 1980s and early 1990s, although relatively high GDP growth was achieved (see Table 7.1) there were significant slippages in the government’s implementation of economic reform. The crunch came in 1992, when there was a full blown fiscal crisis and the ‘printing press’ was deployed, resulting in very high inflation.1 Following the crisis, the realization of the need and desire for change came from the highest levels of government. The President changed the team in charge of the economy with the instruction that fiscal discipline was to be strictly adhered to.KeywordsInterest RateMonetary PolicyCentral BankCommercial BankMoney DemandThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.