Analysis of Monetary Policy Objectives as Applied to Uganda’s Economy: The Dream to Achieve the Middle-Income Status in 2020 is Gone
Date
2020
Journal Title
Journal ISSN
Volume Title
Publisher
International Journal of Research in Engineering, IT and Social Sciences
Abstract
This article analyses the effects of monetary policies in terms of monetary objectives, and instruments
which are used by most monetary authorities to manage the requirements of the country’s economy and how they
influence economic activities of the country. The study is centered on four policy objectives which Bank of Uganda
has been using namely; full employment, price stability which includes controlling inflation and economic
fluctuations, economic growth and maintenance of balance of payment equilibrium. The instruments which are
bank rates, open market operations, change in reserve ratios and selective credit controls used by the central
bank are dealt with in this study. Though the economic growth figures of Uganda’s economy have been in the
range of 3.0 % to 6.1 % for many years, this has not demonstrated the general growth of income of Ugandans
during the same period. According to the World Bank in 2019, Uganda with its population of over 42 million
people has a gross domestic product of US $ 33.6 million and is placed number 3 after Kenya and Tanzania.
However, in economic growth, it is number 4, after Rwanda, Tanzania and Kenya respectively. This questions the
ability of the country to achieve the middle-income status by 2020 as had been predicted. The weaknesses in
implementation of the monetary objectives which caused the government failure to achieve Uganda’s goal and
finally the important strategies and areas which Uganda should use to generate high rates of economic growth
to transfer in the economy and maintain macroeconomic stability are recommended in this aricle.
Description
Keywords
Monetary Policy; Middle-Income Status; Economic Growth; Growth Domestic Product; Balance of Payments.