No printing election money, Governor Mutebile

BOU Governor Emanuel Mutebile
BOU Governor Emanuel Mutebile

The Governor Bank of Uganda has suspended printing of money during elections, fearing such money would end up facilitating political campaigns.

Emmanuel Tumusiime-Mutebile also fears that printing money at such a time would fuel inflation such as the one that hit the economy after the 2011 elections.

Speaking at the Uganda Bankers Association dinner, Mr. Mutebile said that he was not prepared to print any money to finance public expenditure because it is already catered for in the National Budget.

Mutebile instead said should the need arise, he would issue treasury bills and bonds to raise the money.
A treasury bill is a short-term debt obligation issued by the government as a primary instrument for regulating money supply and raising funds via open market operations.

Treasury bonds normally have a longer maturity period.
The governor said: “The main source of concern for the medium term inflation outlook expressed by many people in the private sector is fiscal policy, largely because of the presumed dictates of the electoral cycle.”
He added: “Fiscal deficits which are financed by the central bank through the printing of money are much more inflationary than those financed by borrowing from the market as the latter leaves the money supply unchanged.”
However, Mr Mutebile further argued that despite such fears, the central bank is ready to deal with eventualities such as inflationary shocks that pose threats to the economy.

Story by Daily Monitor’s Ismail Musa Ladu