Check Inflation, Museveni Tells Banks

Aug 20, 2003

PRESIDENT Yoweri Museveni has asked African central banks to enforce financial regulations and fight inflation.

By J. Eremu and A. Kanyegirire
PRESIDENT Yoweri Museveni has asked African central banks to enforce financial regulations and fight inflation.

He also told the bank governors attending the 27th assembly of the Association of African Central Banks (AACB) to tell off finance ministers, if governments were overborrowing.

In a speech read by the Premier, Apolo Nsibambi at the opening of the meeting at Speke Resort Munyonyo yesterday, Museveni said high inflation discourages investments and leads to capital flight as most people keep their savings abroad.

“The Central Bank has a duty to preserve the real value of the nation’s currency. To allow inflation to erode the value of the currency is a betrayal of that duty,” he said.
He added, “Be single-minded in controlling inflation, do not hesitate to tell the finance minister if the budget deficit is exceptionally high.”

He urged political leaders to allow the governors exercise professional duties with autonomy.

Museveni said Uganda had learnt a bitter lesson in the 1990s when poor enforcement of financial principles led to the collapse of some commercial banks.

He said, “I spoke to an ex-central bank governor and he told me that at times when they send banking supervisors to commercial banks, the supervisors are compromised by financial robbers so that they don’t report accurately.” He said Central banks should punish such officials.

The two-day conference on “Sub-regional Monetary Integration: Challenges and Prospects,” has attracted 38 central bank governors.
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