Central bank policies have, in some instances, clashed with government programmes that put the economy on a collision path. With government borrowing outstripping private sector credit in Uganda, this message of fiscal dominance may require heightened attention.
In economic theory, there is concept termed as Fiscal dominance, which is an economic condition that occurs when a country has a large government debt and deficit such that monetary policy targets keeping the government from bankruptcy as opposed to economic targets such as inflation, growth and employment.
During a two-day meeting of central bank governors from across Africa in Kampala last week, Bank of Uganda deputy governor, Dr Louis Kasekende,urged Africa Union to be at the centre of having governments accountable, “particularly when we [central bank governors] don’t agree with what we sign.”
“We have to ensure policy positions offer the appropriate space to allow the private sector to thrive,