Uganda’s foreign exchange reserves fell by 4.3% in the three months leading up to July, according to the Bank of Uganda’s report released Wednesday.
At the end of July, the reserves totaled $3.3 billion, covering approximately three months of imports. This is a decrease from $3.5 billion recorded at the end of April.
The central bank attributed the decline to increased external debt service payments and difficulties in securing affordable external loans.
Additionally, limited foreign exchange purchases have contributed to the downward trend in reserves.
In response to the situation, the central bank has initiated gold purchases to enhance and diversify its reserves.
The bank emphasized that the reduction in reserve assets highlights the urgent need for better public debt management.
Furthermore, strategies are necessary to improve foreign exchange inflows into the country.
Despite these challenges, Uganda’s public debt remains sustainable but faces a moderate risk of distress, according to the central bank.
Looking ahead, the economy is expected to grow between 6.0% and 6.5% in the 2024/25 financial year, driven by stronger private sector investment and anticipated oil exports.
