COVID19: Uganda to seek loan from World Bank, Central Bank to provide liquidity

Uganda, like many countries around the world, is grappling with the impacts of the COVID-19 pandemic. In response to the crisis, Uganda's Central Bank has announced measures to provide liquidity to commercial banks to cushion them from the negative effects of the outbreak. At the same time, the Ministry of Finance has revealed plans to seek a loan of $190 million from the World Bank to help bolster the country's economy during these challenging times. The announcement comes in the wake of a confirmed case of coronavirus in the country. A 36-year-old individual who had traveled from Dubai, along with 84 other passengers on the same flight, was identified as the first confirmed case. The handling of this case has sparked mixed reactions among Ugandans, with concerns raised about the lack of quarantine for the other passengers due to logistical constraints and perceived low risk based on their origin countries. One of the key points of contention has been the issue of quarantine costs for individuals entering the country. Reports emerged of passengers being asked to pay $100 per night for self-quarantine, raising questions about the country's preparedness to handle incoming travelers. Despite allocating significant funds towards surveillance activities, the government's reluctance to cover quarantine costs has raised eyebrows. In response to the economic challenges posed by the pandemic, the Bank of Uganda has pledged to provide exceptional liquidity assistance to financial institutions, including commercial banks. This assistance may involve measures such as lowering reserve requirements and allowing for loan restructuring to support businesses facing liquidity issues. The move is aimed at addressing working capital gaps and ensuring the stability of the financial sector amidst the crisis. David Walakira, a Policy Analyst & Development Economist, highlighted the importance of the central bank's intervention in bolstering liquidity for businesses, especially those reliant on imports from countries like China that continue to grapple with the outbreak. The extension of loan restructuring and the potential adjustment of bank rates are expected to provide much-needed relief to businesses facing financial strain. As Uganda navigates the economic and public health challenges posed by the COVID-19 pandemic, the government's response will be crucial in mitigating the impact on the country's economy and population. The decision to seek financial assistance from international partners like the World Bank underscores the severity of the situation and the need for coordinated efforts to address the multifaceted challenges posed by the global health crisis.