BOU facility to boost borrowing

Feb 11, 2003

THE new system of trading in Government securities introduced by the Bank of Uganda (BOU) recently, is expected to translate into a lower cost of borrowing, a Central Bank official has said.

By Steven Odeu

THE new system of trading in Government securities introduced by the Bank of Uganda (BOU) recently, is expected to translate into a lower cost of borrowing, a Central Bank official has said.

The Primary Dealers System, which is an organised group of financial institutions appointed by BOU to receive and submit investors’ bids for the auction of Government securities will officially be introduced next week.

“We expect to increase auctions for all securities by this innovation. All bids to the market will be coming through primary dealers, and the development should translate into lower cost of borrowing for Government securities,” Joseph Kanyike, the BOU director for domestic financial markets department, said on Monday.

This was at a luncheon for chief executive officers for commercial banks and other financial institutions at the Grand Imperial.

BOU has already selected six commercial banks after they met the specific criterion to be licensed as primary dealers.

The selected primary dealers include Bank of Baroda, Barclays Bank of Uganda Ltd., Citibank, dfcu Bank, Stanbic Bank and Standard Chartered Bank.

Kanyike said effective February 20, 2003 primary dealers would be required to quote bid (buy) and ask (sell) prices for Treasury bill auctioned on February 19th. Thereafter primary dealers will be required to quote two bid prices for securities issued recently.

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