Bank of Uganda plans to phase out the 1,000 shilling currency ($0.00027) note as the printing costs rise.

The government will undertake a cost-benefit analysis followed by a call to replace low-denomination banknotes with coins.

In a letter of intent published in the International Monetary Fund’s (IMF) fourth review in June, Finance Minister Matia Kasiaja and Bank of Uganda Executive Director Research Adam Mugume said that printing costs for banknotes had continued to escalate, which necessitates a market study to see which ones can be replaced with coins.

The central bank will start with phasing out the 1,000 paper note before looking at others, Mugume told Monitor, an Uganda-based news daily.

“The notes are heavily used in transactions and, therefore, soiled heavily, which renders them unusable or reduces their lifespan. We have to reprint them frequently, yet the cost of printing relative to value is quite high,” he added.

Due to durability and easy handling, the central bank has replaced other small currency denominations ranging from 1 to 500 shillings with coins.

In the 2021/22 annual report, the apex bank said the cost of issuing currency, including printing and circulation, has increased by 24.4 billion shillings or 16.5%.

(Editing by Brinda Darasha; brinda.darasha@lseg.com)