Lately, Finance Minister Matia Kasaija has issued contradictory statements that threaten the independence of the Bank of Uganda (BoU).
While the BoU who’s mandate includes currency printing and regulation is against printing the money locally, on the contrary Mr. Kasaija wants the currency printed in Uganda so as ‘‘to cut costs.’’
According to the Daily Monitor, the Governor BoU, Tumusiime Mutebile warned that establishing a currency printing factory in Uganda would plunge the country into problems.
On 11 June 2016, a joint venture between Uganda Printing and Publishing Corporation and a German firm, Veridos Identity Solutions GMBH was signed. The MOU seeks to establish a firm in Uganda to print the money locally.
Mutebile says Banknote printing is a much-specialized activity that is complex, with high quality and security sensitivity which a handful of reputable currency printers undertake in the world.
Mr. Kasaijja has also been in the news more than the BoU regarding the planned sale of Crane Bank. On 20th October 2016, BoU took over Crane Bank over capital inadequacy.
You might be asking yourself: What role does the Minister and the Ministry of Finance have in the sale of a commercial Bank?-read Crane Bank.
That is the work of BoU, who may notify the Ministry of Finance as a stakeholder.
The World Bank, IMF is watching
The role of the Ministry of Finance, Planning and Economic Development includes: coordination of development planning; mobilization of public resources; and ensuring effective accountability for the use of such resources.
On the other hand, the mandate of the Bank of Uganda is to “foster price stability and a sound financial system” this includes; formulating macro prudent policies, supervision and regulation financial institutions and enhancing the efficiency of financial markets.
From the above stated roles, one may ask: Is Mr. Kasaijja overstepping his role? Is he too excited about his job?
The BoU is an independent institution, and the Governor reports directly to the president.
Enter IMF, World Bank
Uganda’s main funders; the World Bank and the International Monetary Fund (IMF) are closely following the ‘fights’ between Minister Kasaijja and the Bank of Uganda.
Like they have done before, the two bodies are likely intervene if Mr. Kasaijja keeps on interfering with the work of the Bank of Uganda, As they have an interest in what happens in Uganda.
In her latest report; Seventh Review under the Policy Support Instrument for Uganda, the IMF noted:
‘‘Looking ahead, the priorities [for Uganda government] include …… amending the Bank of Uganda Act to reinforce Central bank independence.’’
What is not clear is whether this statement has any relationship with the ongoing ‘fights’ between the BoU and the Finance Minister.
Sources say the World Bank and the IMF played a key role in the sacking of two former Finance Ministers: Mayanja Nkangi and Crispus Kiyonga.
Hon. Kiyonga was Finance minister between 1986 – 1992. While Hon Mayanja Nkangi was minister of Finance from 1992 to 1998
It is said, Hon. Kiyonga was against currency reform in the 1980’s, which [the World Bank and the Internal Monetary Fund] thought would curb inflation that was way above 100 percent.
Mr. Nkangi on the other hand was against Privatization. He reportedly stood his ground, saying Uganda had better applied local policies as opposed to global policies. The WB and IMF wanted government to privatize all parastal bodies.
It is said, with pressure from the IMF and the World Bank, the two ministries had to go.
It is this background that Mr. Kasaijja might not survive as minister of Finance in 2017, if he continues to ‘interfere’ with the independence of Bank of Uganda.
More about the author: Moses Kaketo