Economic analysts are asking government to urgently re-think a broader national economic policy that will shield all Ugandans from looming economic recession.
This is after the Bank Of Uganda took over management of Crane Bank because it was significantly undercapitalized, a situation that posed caused a systemic risk to the entire financial system.
In 2010 the Central Bank revised the minimum capital requirement to Shs25b, below which any bank cannot be allowed to continue operating.
Now speaking to KFM, Dr. Fred Muhumuza a lecturer of economics at Makarere University says Crane Bank’s woes are a sign of a bigger economic problem.
He explains that it was wrong to borrow from Commercial Banks and invest in construction of long term projects like roads and power dams which do not yield returns in short term.
He adds that government must strike a balance between public investment and survival of the public sector.
Meanwhile, the Ministry of Finance has asked members of the public with accounts in Crane Bank not to panic.
State minister of finance in charge of Planning David Bahati says this was done to protect all deposits at the bank and is proof that the central bank is on top of its game.
The Central Bank has now recalled former executive director Edward Kitimbo Mugwanya from retirement and assigned him to manage Crane Bank on behalf of the governor.
Story By Benjamin Jumbe & Samueal Ssebuliba