The Bank of Uganda (BOU) says it has initiated a Domestic Gold Purchase Program with the aims of mitigating the declining foreign currency reserves and to buffer against ‘risks in the international financial markets.’
The gold purchase program will help in accumulating foreign currency reserves and address the associated risks in the international financial markets, the bank said in its State of the Economy Report for 2023/2024.
The move, reminiscent of Zimbabwe’s initiativies to back its currency with gold, is also expected to support the government’s program for ongoing value addition to minerals and the Import Substitution Strategy by reducing the imports of raw gold into the country.
“By purchasing gold directly from the artisanal miners, the BOU will also be supporting the livelihoods of artisanal and small-scale miners, and this has positive spill-over effects on other sectors of the economy in line with the Bank’s mission to support socio-economic transformation.”
🇿🇼INTRODUCING | #Zimbabwe Introduces Zim Gold, the New Currency Backed by Gold and Precious Minerals
According to reports, the Central Bank’s vaults hold 1.1 tonnes of solid gold. It also has almost 1.5 tonnes more abroad, as well as $100 million in cash and precious minerals –… pic.twitter.com/WkAjB655zq
— BitKE (@BitcoinKE) April 8, 2024
The gold purchase program, amongst other measures, is projected to reduce imports of raw gold, contributing to the reduction in total imports, in turn leading to a decrease in both trade deficit and current account deficit.
According to the report, despite the tight global financial conditions, the Ugandan Shilling has been relatively strong against the U.S. dollar reflecting the tight monetary policy stance supported by relatively improved commodity export revenues.
“More support for the [Ugandan] Shilling came from increased inflows from export revenues, particularly coffee, and inflows from Non-Governmental Organizations (NGOs). These inflows more than outweighed the demand from domestic corporations, such as manufacturing, energy, and trade, reflecting strong economic activity.”
Last August [2023], the Ugandan President, Yoweri Museveni, said the country was not beholden to the World Bank and IMF and has the option of non-Bretton Woods institutions if it has to borrow loans.
“If there is absolute need for borrowing, there are a number of non-Bretton woods sources from which we can borrow,” said President Museveni.
‘The World Bank and Other Actors Are Our Problem and Really Under-Estimate All Africans,’ Says President of Uganda 🇺🇬
The above comment comes in response to the recent move by the World Bank to suspend any future funding for projects in Uganda citing human rights violations… pic.twitter.com/VWzkXjjwL5
— BitKE (@BitcoinKE) August 12, 2023
The World Bank had said it would be putting on hold funding to Uganda for passing the Anti-Homosexuality Act.
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