According to the Bank of Uganda (BOU), it has started a Domestic Gold Purchase Programme to protect against “risks in the international financial markets” and to mitigate the country’s diminishing foreign exchange reserves.

The bank stated in its 2023/2024 State of the Economy Report that the gold purchase programme will help manage related risks in the global financial markets and aid in building up foreign exchange reserves. By lowering the amount of raw gold imports into the nation, the action is anticipated to help the government’s programme for continuous value addition to minerals and the Import Substitution Strategy, which is reminiscent of Zimbabwe’s initial efforts to back its currency with gold.

In keeping with the Bank’s objective to promote socioeconomic transformation, “by buying gold directly from the artisanal miners, the BOU will also be supporting the livelihoods of artisanal and small-scale miners, and this has positive spillover effects on other sectors of the economy.”

Among other things, the gold purchase programme is expected to lower the amount of raw gold imported, which will lower the amount of imports overall and lower the trade and current account deficits. The research claims that the Ugandan Shilling has held up well versus the US dollar despite the tight global financial conditions. This strength is attributed to the strict monetary policy stance and the substantially improved revenue from commodities exports.

Increased export earnings, especially from coffee, and inflows from non-governmental organisations (NGOs) provided more support for the [Ugandan] Shilling. Strong economic activity is demonstrated by the fact that these inflows more than offset the demand from domestic firms in industries like commerce, energy, and manufacturing.

Yoweri Museveni, the president of Uganda, stated in August of last year (2023) that his nation is not dependent on the World Bank or IMF and that it can choose non-Bretton Woods institutions if it needs loans.

President Museveni stated, “There are a number of non-Bretton Woods sources from which we can borrow if there is an absolute need for borrowing.”

The World Bank has threatened to stop giving Uganda financing in response to the country’s adoption of the Anti-Homosexuality Act.