The Bank of Uganda has announced it plans to introduce major reforms in the first quarter of the coming financial year, aimed at boosting competition and activity in buying and selling of government of securities such as treasury bills and treasury bonds.

BoU government Emmanuel Tumusiime Mutebile made the announcement this week during a ceremony at which the Central Bank recognised Standard Chartered Bank as the best primary dealer in government securities for the year 2009.

Key among the reforms, Mutebile outlined, will be the opening up of the Primary Dealership market to non-bank primary dealers.

In 2003, the central bank introduced the Primary dealership system whereby six major commercial banks were chosen as the primary buyers of treasury bonds and treasury bills, so that they could sell them to other banks as well as individuals and businesses in a secondary market.

The central bank undertook the reforms in a bid to encourage more trading in those government instruments as a way of contributing to the development of capital markets by encouraging more frequent exchanges of the products more than before.

However, while the central bank noted some progress in the sector, Mutebile pointed to outstanding problems including the practice of buying and hoarding of the securities.

Mutebile announced that the bank also plans to acquire a state of the art Central Securities Depository system, which would provide functionalities such as electronic bidding.

Meanwhile, the Bank's Executive Director Operators Erias Kasozi reiterated the central bank's readiness to boost exports and local demand by maintaining a higher rate of the shilling against the US dollar.

Over the past couple of weeks, the Uganda shilling has been depreciating against the US dollar, but central bank officials say that apart from the fact that the green back has been strengthening against many major currencies, ensuring higher shilling-to-dollar rates could boost Uganda's exports.

The move could also be instigated by the increase over the past two years in the volumes and revenues from exports from Uganda to neighbouring countries, particularly Sudan, that have resulted into a trade surplus for the country.
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