Uganda central bank cuts policy rate to 7%

Uganda's central bank on Monday again cut its benchmark lending rate by 100 basis points, taking it down to 7%, to support the east African nation's economy as it downgraded projected growth.

The bank said there was a "continuous shrinkage of economic activity" as a result of the upheaval triggered by COVID-19. Economic growth this year, the bank said, will now be between 2.5-3.5%, down from a previous forecast of between 3-4%.

"On the whole, household expenditure, investment, exports, and imports are projected to decline," the bank's statement said. The bank also cut the benchmark by 100 basis points when it last met in April. It will meet again in two months' time. Uganda implemented one of Africa's tightest lockdowns to try to stem the spread of the coronavirus outbreak.

Authorities shut down borders, closed schools, and shuttered all but the most essential businesses. Public gatherings were also banned as well as both public and private transport. The government has since started to gradually ease the restrictions but borders are still closed and schools still shut.

Tourism, one of the country's main economic mainstays has been virtually snuffed out and the government estimates the country will lose $1.6 billion annually as a result. Uganda so far has had 686 cases of COVID-19 and no deaths.