BANK OF UGANDA
Opening Remarks by:
Prof. Emmanuel Tumusiime-Mutebile
Governor, Bank of Uganda,
At the Hosting of the Parliament of Ghana Finance Committee
Members at a Benchmarking Exercise to Bank of Uganda,
Board Room, Level 7, Plot 37/45 Kampala Road, Uganda
Thursday, September 27, 2018
Honourable Members of Parliament, Parliament of Uganda;
Honourable Members of Parliament, Parliament of Ghana;
Technical Staff from both Parliaments;
Ladies and Gentlemen,
Good morning,
I would like to welcome you all to the Bank of Uganda. It is a privilege
to host our brothers and sisters from Ghana, a country which holds a
special status in Africa on account of the pioneering role it has played in
-
many different fields - political, economic and social and in particular
for its pan Africanist approach to foreign policy which has been an
inspiration throughout the continent.
Ghana's pioneering role
is also of relevance in the field of central
banking. The Bank of Ghana was one of the first central banks in sub-
Saharan Africa to introduce an inflation targeting monetary policy
framework in the mid 2000s, at a time when virtually all other central
banks in the region were either implementing monetary targets or
experience with inflation targeting
targeting the exchange rate. Ghana's
was of great value to the Bank of Uganda and influenced its decision to
adopt a similar monetary policy framework in 2011; a framework which
has proved very successful in controlling inflation.
Given that our guests are all legislators, I would like to say a few words
about the relationship between Parliament and the central bank, as this
relationship is complex and not always well understood. The 1995
Ugandan Constitution confers independence on the Bank of Uganda.
Specifically the Constitution states that:
"In performing its functions, the
Bank of Uganda shall conform to this Constitution but shall not be
subject to the direction or control of any person or authority."
What does this mean in practice? In essence it means that the Bank of
Uganda is free to implement its core policy responsibilities, which are
monetary policy and bank regulation, without political interference. For
example, the Government cannot give instructions to the Bank of
Uganda with regard to setting the policy interest rate. There is a very
strong economic rationale for central bank independence, because
independence gives monetary policy and bank regulation more
credibility with the private sector, which in turn improves incentives for
the private sector to act in ways which are consistent with low inflation
and financial stability. This is why central bank independence has
become an important characteristic of modern central banking around
the world.
However, a central bank is a public institution and a public institution
must be accountable to the public, through its elected representatives in
Parliament.
Consequently, although Parliament cannot give instructions to the
central bank on how to implement its responsibilities, it must be able to
provide oversight of the operations of the central bank and make
criticisms of it where this is warranted.
The main bodies within Parliament which provide oversight of the Bank
of Uganda are the specialist committees, in particular the Committee on
Commissions, Statutory Authorities, and State Enterprises (COSASE)
and the Public Accounts Committee (PAC). The Bank of Uganda's
annual report and audited accounts are submitted by the Auditor General
to the Speaker of Parliament, who can refer them to a Parliamentary
Committee.
Myself and my staff frequently appear before Parliamentary
Committees, both to answer questions about our own operations and to
explain our views in regard to economic and financial issues.
If a central bank is to maintain the confidence of the public in the
independence of its operations, it must be prepared to be fully
transparent and explain its actions to legislators and to listen to the views
of these legislators, who represent the public.
Together with my staff, I will be pleased to answer any questions you
may have and to hear your own views on these matters or any others in
which you are interested.
Thank you all for listening.