Uganda’s foreign exchange reserves have continued to decline, shrinking by 4.3% in the three months to the end of July.
The Bank of Uganda attributed the drop to increased debt service payments, difficulties in securing affordable external loans, and limited foreign exchange purchases.
The country’s reserves now stand at $3.3 billion, equivalent to about three months of imports. In response, the central bank has begun purchasing gold to bolster and diversify its reserves.
The bank emphasized the need for improved public debt management and strategies to increase foreign exchange inflows.
While Uganda’s public debt remains sustainable, it faces a moderate risk of debt distress, necessitating careful planning to mitigate potential vulnerabilities.
Despite these challenges, the Ugandan economy is projected to grow between 6.0 and 6.5% in the current financial year.
Stronger private sector investment and the anticipated start of oil exports next year are expected to contribute to this growth.