Uganda’s Ministry of Finance, Planning and Economic Development reviewed the response to shilling depreciation in a statement to Parliament by Minister Henry Musasizi, covering monetary tightening, spending restraint and fuel supply measures. The shilling weakened from approximately UGX 3,604 per USD in March 2026 to around UGX 4,500 in late October, a roughly 20% decline in its dollar value. Increased demand for foreign currency to finance petroleum and other imports has coincided with weaker agricultural export earnings. Headline inflation remained at 4.6% in September, but energy, fuel and utilities inflation reached 14.5%. The Bank of Uganda has raised its Central Bank Rate from 9.75% to 12% and commercial banks’ cash reserve requirement from 11% to 13.5%. It will continue managing liquidity and intervene where necessary to address excessive foreign exchange volatility, without defending a particular exchange rate. Fiscal restraint is reinforcing the monetary response. Expenditure releases for the first half of fiscal year 2026/27 have been limited to 45.6% of the approved budget, against a planned 55.7%. Essential services, critical obligations and investments supporting production and foreign exchange earnings will receive priority. Spending commitments must remain aligned with available resources to avoid accumulating domestic arrears. Previously outlined fuel measures include centralised bulk imports, expanded storage for strategic reserves, pipeline transportation and investment in domestic refining capacity. The government will avoid price controls, citing risks to supply, and cautioned that broad subsidies and tax reductions could strain public finances and disproportionately benefit higher income consumers and larger businesses. Longer term measures focus on diversifying exports and increasing domestic production and value addition to reduce dependence on imported fuel and a narrow range of foreign exchange sources. Commercial oil production is also expected to contribute foreign exchange earnings and public revenue over time.
Uganda's Ministry of Finance, Planning and Economic Development reviews policy response to 20% shilling depreciation
In a parliamentary statement, Uganda’s Finance, Planning and Economic Development Minister Henry Musasizi reviewed the response to the shilling’s roughly 20% depreciation against the dollar since March 2026. The Bank of Uganda has raised its policy rate to 12% and banks’ cash reserve requirement to 13.5%, alongside government spending restraint. Fuel supply measures and export diversification complement the response, while foreign exchange intervention will address excessive volatility rather than defend a particular rate.