Rising inflation: Ugandan govt cuts expenditure by almost sh3 trillion
Ggoobi said, while featuring on one of the evening TV talk shows in Kampala on Wednesday (October 21), that the Bank of Uganda (BOU) had moved decisively to arrest inflation now at 4.6% but within target.
The Ministry of Finance Permanent Secretary and Secretary to the Treasury, Ramadhan Ggoobi. (File photo)
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The Ministry of Finance Permanent Secretary and Secretary to the Treasury, Ramadhan Ggoobi, has said the Government has responded to the contractionary monetary policy by cutting expenditure by almost three trillion shillings.
A contractionary monetary policy is a central bank strategy used to fight rising inflation by reducing the money supply and raising interest rates.
Ggoobi said, while featuring on one of the evening TV talk shows in Kampala on Wednesday (October 21), that the Bank of Uganda (BOU) had moved decisively to arrest inflation now at 4.6% but within target.
“We have to coordinate the fiscal policy and monetary policy. Government has responded to the contractionary monetary policy by releasing less money in quarter two than what Government wanted by cutting expenditure by almost three trillion shillings,” he said in a statement shared by the ministry.
He also noted that tourism receipts were affected by the Ebola threat, especially during the last quarter, adding that commodity prices of exports such as coffee and cocoa have been affected, leading to reduced inflow of the dollar and a relative increase in the price of the dollar.
He reiterated that the economy is growing steadily, noting that the International Monetary Fund projects Uganda to be the fastest-growing economy in the region in 2027 at 9.9%, slightly below the double-digit due to exogenous factors as stated above.
The permanent secretary also said the economic fundamentals are in a good place despite the depreciation of the shilling caused mainly by external factors, including the war in the Middle East, which has led to an increase in oil prices globally.
He said a barrel now costs about $100, and as a result the pump price has gone up, and so are the transport costs, adding that the increase in freight and insurance costs has led to an increase in the prices of imports.
“In that regard, I believe the Central Bank was right,” he said.
The CBR is the rate at which the BOU lends to commercial banks, which in turn lend to the public on interest.
The BOU recently raised the CBR from 9.75% to 12.0% after a special Monetary Policy Committee meeting on October 14, 2026.
The decision aims to contain rising inflation risks driven by higher fuel prices and exchange rate pressures, while safeguarding price stability. Inflation refers to the rise in the cost of goods and services over a period of time.
The Bank also raised the Cash Reserve Requirement from 11.0% to 13.5%, effective from September 24, 2026, to manage excess liquidity in the banking system and strengthen monetary policy effectiveness.