remarks by prof. emmanuel tumusiime - mutebile governor, bank of uganda at the high level stakeholders ’ engagement on building a 21st century ugandan economy kampala serena hotel tuesday, september 3, 2019 the bank of uganda ( bou ) has not only successfully achieved its inflation objective of low and stable inflation, but has done so while supporting economic activity. in the last two financial years ( fy ), uganda ’ s economy has grown on average by 6. 1 per cent from a growth of 3. 9 per cent in fy2016 / 17. investor surveys suggest that business conditions and sentiments are strong. credit to the private sector has improved ; helped by accommodative monetary policy stance. the economy is expected to maintain this growth momentum and is projected to grow by between 6. 0 and 6. 3 per cent in fy 2019 / 20, and between 6. 5 and 7. 0 per cent in the medium term. the growth prospects are supported by private sector credit growth ; public investment in infrastructure ; higher agricultural output due to favourable weather and positive government interventions in agriculture ; pick - up in activity in the mineral sector ; improved regional security ( with peace in south sudan and drc ), which are expected to boost uganda ’ s exports. there are downside risks to growth, including : a ) lower external demand due to a depressed global economy. b ) political and policy uncertainty, which are very elevated in several major economies with global growth continuing to be biased downwards. already, the probability for a global recession is very high. page 2 of 5 c ) climate change which will increase uncertainty of weather patterns and constrain the agricultural sector. domestic inflation remains subdued, with the annual headline and core inflation averaging 2. 7 per cent and 3. 7 per cent, respectively, in the quarter to august 2019. the inflation outlook is favourable, with inflation projected to stabilize around the 5. 0 per cent target in the medium term. given the current inflation outlook, bou has kept the policy rate on hold since october 2018. low inflation protects the purchasing power of ugandans, especially for the poor households. bou has successfully ensured financial sector stability, including through resolving commercial banks that posed systemic risks by being very highly interconnected, both by the number and size of transactions with the other commencial banks. currently, commercial banks are wellcapitalized, liquid, and profitable. improvements in asset quality have contributed to an easing of lending standards

in addition, the central bank needs to coordinate with financial institutions and service providers to make electronic payments to be more accessible, reliable and, of course, available at reasonable price. the third consideration is the implementation of principles for financial market infrastructures. from the regulatory point of view, the important payment and settlement systems need to be appropriately regulated. the recent financial crisis has shown that financial market infrastructures, such as payment and settlement systems and central counterparty, can be sources of financial shocks or major channels that shocks are transmitted across domestic and international financial markets. to enhance safety and efficiency, the principles for financial market infrastructures have been prescribed by the committee on payment and settlement systems ( cpss ) and the technical committee of the international organization of securities commissions ( iosco ) in april 2012 with objectives to limit systemic risk and foster transparency and financial stability. in response to the new international standard, the bank of thailand intends to adopt these principles to our systemically important payment and settlement system which is bahtnet system. moreover, we will coordinate with other regulators to ensure that all systemically important payment and settlement systems are adequately supervised. i would like to conclude here that, to join the aec in 2015 both central bank and financial institutions need to have proactive strategies to deal with the changing economic and social environments. the central bank will play an important role in supporting private sectors and ensuring the stability and efficiency of financial system and infrastructures. concurrently, the financial institutions need to rethink and redesign their business processes and strategies in order to stay at the forefront of highly competitive environment as well as to reap the full benefit of the integrated economic community. thank you. bis central bankers ’ speeches