Another reason for the amendment is to do with aligning of the Public Finance Management Act with the Bank of Uganda Act, state minister for finance David Bahati said.
PIC: Left-right: State minister for planning David Bahati, Media Centre boss Ofwono Opondo and minister for Information Communication Technology and National guidance Frank Tumwebaze arrive for the press briefing on the outcomes of the cabinet meeting. This was at Media Centre in Kampala, February 27, 2018. (Credit: Maria Wamala)
KAMPALA - Cabinet has agreed to amend the Bank of Uganda (BOU) Act of 2000 to update the Central Bank’s objectives and functions to reflect the changing mandate and roles of a central bank, the minister for ICT and national guidance Frank Tumwebaze has said.
“Cabinet approved the principles to amend BOU Act of 2000 and authorised the finance ministry to issue drafting instructions to the first parliamentary council to have the amendment Bill drafted and then tabled to Parliament for discussion,” Tumwebaze said, before listing the policy objectives the Government seeks to achieve in the amendments.
Why the amendment?
Tumwebaze said the amendment seeks to update the Central Bank’s objectives and functions to reflect the changing mandate and roles of a central bank.
“The core mandate of a central bank is monetary policy so the law should give them the enabling instruments to do their work well.” Tumwebaze explained.
The amendment also seeks to ensure effective implementation of the requirements of the new national legislation and regional East African commitments, the minister for information said.
He added that the amendment also seeks to strengthen the provisions in the current Act provisions that are considered inadequate for the effective execution of Bank of Uganda’s constitutional roles in the changing environment and clarify those that have presented interpretation challenges.
“So, the BOU law must be tight such that we do not expose our central bank to any challenges,” Tumwebaze said, adding that the paper was presented by the finance ministry to the Cabinet, which has given the ministry a go-ahead.
According to Tumwebaze, the mentioned objectives, which will be achieved through the amendment, will enhance the central bank’s capacity in dealing with the financial market environment.
The revelation was made during a press briefing at media centre to report on the outcomes of the Cabinet meeting chaired by the President in Entebbe on Monday.
Ministry of finance
State minister for planning David Bahati said: “This amendment is crucial in helping us in the management of our external reserves.
Currently, we are keeping our external reserves of an equivalent of three months of imports. It is a fixed way of management of our reserves, in terms of months.”
“We keep our reserves and use them to stabilise our shillings. In case of any need, we also use our reserves to support imports to help the country. What we are seeking in the amendment, is to allow flexibility, so that instead of fixing our reserves in terms on months, we allow flexibility so that we fix them in terms of dollars or shillings instead of months.” Bahati said.
Another reason for the amendment is to do with aligning of the Public Finance Management Act with the Bank of Uganda Act, he said.
Bahati added that the amendment also will help look at the emerging issues of mobile money transactions and other payment settlement systems that are already happening but not captured in our legal framework systems.