Finance minister Musasizi outlines interventions to contain economic pressures
“Do you want an economy with no reserves? The answer is definitely no,” Musasizi told legislators during the plenary sitting chaired by Deputy Speaker Thomas Tayebwa. He said Government was using gold as one of the assets to support the country’s reserves, under a policy approved by Cabinet and communicated to Parliament.
Musasizi urged households to conserve fuel and energy, purchase locally made goods where competitive and avoid panic buying of foreign currency.
ECONOMY
KAMPALA - Finance Minister Henry Musasizi has outlined measures to contain economic pressures, including tighter monetary policy, spending controls, increased use of gold to support reserves and efforts to boost foreign-exchange earnings, as the shilling continues to weaken against the US dollar.
Presenting the State of the Economy statement to Parliament, Musasizi on October 27th said Government was closely monitoring developments and would introduce additional interventions if necessary.
He cautioned against exhausting foreign-exchange reserves to defend the shilling, urging Ugandans to avoid panic buying of dollars and other foreign currencies.
“Do you want an economy with no reserves? The answer is definitely no,” Musasizi told legislators during the plenary sitting chaired by Deputy Speaker Thomas Tayebwa.
He said Government was using gold as one of the assets to support the country’s reserves, under a policy approved by Cabinet and communicated to Parliament.
Musasizi said foreign-exchange demand from the energy sector had increased from $360m in the three months to September 2025 to $620m during the corresponding period in 2026, partly due to imports associated with oil projects ahead of production.
To support stability, the Bank of Uganda raised the Central Bank Rate from 9.75% to 12% and increased commercial banks’ cash reserve requirement from 11% to 13.5%. The central bank will also continue managing liquidity and may intervene in the foreign-exchange market to address excessive volatility.
Government has also restrained expenditure, with first-half releases for the 2026/27 financial year standing at 45.6% of the approved budget, below the planned 55.7%.
Musasizi said Accounting Officers have been directed to align commitments with available resources while ensuring payments for obligations already incurred are not unnecessarily delayed, which could create domestic arrears and hurt businesses.
On fuel prices, Musasizi cautioned against price controls, broad-based subsidies and tax cuts, arguing that such measures could discourage supply, encourage smuggling and reduce revenue needed to finance public services.
Longer-term interventions include improving agricultural productivity, expanding agro-processing, promoting tourism and manufacturing, adding value to minerals and widening access to export markets to increase foreign-exchange earnings.
Musasizi urged households to conserve fuel and energy, purchase locally made goods where competitive and avoid panic buying of foreign currency.
Businesses were encouraged to expand exports, improve efficiency and manage foreign-exchange risks, particularly where they borrow in dollars but earn revenue in shillings.
Uganda’s economy grew by 6.4% in the 2025/26 financial year, up from 6.3% the previous year, reaching Sh250.4 trillion. Headline inflation stood at 4.6% in September, below the Bank of Uganda’s 5% target, although energy, fuel and utilities inflation had risen to 14.5%.
Deputy Speaker Thomas Tayebwa urged leaders to support efforts to stabilise the economy, saying Parliament would remain available to consider further interventions and that the relevant committee would continue engaging the Ministry of Finance.
Musasizi pledged to keep Parliament informed of any additional measures, saying the Ministry was monitoring economic performance and market movements daily.
He expressed confidence that Uganda would overcome the current pressures, urging MPs to help explain the country’s economic position to the public.