Uganda, April 10 -- Bank of Uganda (BoU) has warned that the private sector could be crowded out from the domestic credit market as government continues to register lower than planned tax revenues.

The shortfall in tax revenues, the Central Bank says is also likely to push government into more domestic borrowing, which will result into tax hikes as government attempts to mobilise resources to finance budget deficits.

Government largely borrows from the domestic market through treasury bills and bonds, but has recently borrowed directly from commercial banks, which creates competition for credit with the private sector.

In details contained in the April Monetary Policy Statement, Bank of Uganda noted that a further increase in inflation...