By Nicholas Bariyo
KAMPALA, Uganda--Uganda's central bank maintained its key lending rate at 9.75%, citing easing inflation amid increased investment in the country's fledging oil-and-gas industry.
Uganda's economic outlook remains positive, strengthened by inflows into the oil industry, where France's TotalEnergies and China's Cnooc Ltd are developing a 230,000 barrels-a-day crude project. These investments are strengthening the local currency, easing imported inflation, Bank of Uganda Deputy Governor Michael Atingi-Ego said in a statement.
"Domestic inflation remains subdued," he said. "Inflation stability is largely due to previous monetary policy actions...and diminishing global inflationary pressures."
Uganda's inflation rate remained unchanged at 2.9% in November from October, and Oxford Economics Africa had projected a 25 basis point rate cut as inflation remains below the central bank's 5% target. But the central bank noted that Uganda still faces risks from tight global financial conditions. Potential policy reversals in advanced economies may trigger capital flight to safer havens.
Uganda, which currently exports more coffee beans than any other African nation, is expected to start commercial oil production next year at oil fields along the western border with the Democratic Republic of Congo. Total investments in the oil fields and a 900-mile crude export pipeline are expected to top $10 billion by the end of 2025, according to the energy and minerals ministry.
Write to Nicholas Bariyo at Nicholas.Bariyo@wsj.com
(END) Dow Jones Newswires
12-05-24 0744ET
