Gold, oil and expensive loans: IMF on Uganda’s economic risks

What the report says

The Observer reports that Uganda is trying to prepare for a more ambitious financial future while still facing major weaknesses in day-to-day lending, fiscal management and institutional oversight. In an interview with the paper, IMF resident representative Sebastien Walker discussed the country’s effort to build reserves with gold purchases, the prospect of future oil revenues, interest in a central bank digital currency, and the wider East African goal of a single currency. He said these plans depend on stronger economic and regulatory foundations than Uganda currently has.

The story says commercial borrowing remains very costly, with rates far above the central bank’s policy rate, because government borrowing is crowding out private credit and structural problems such as weak credit data, limited collateral, informality and high operating costs are pushing up lending risk. Walker also cautioned that gold accumulation brings practical and financial risks, including volatility, storage, traceability and anti-money-laundering concerns, and that any reserve strategy needs transparent controls.

On oil, the IMF is pressing for safeguards to protect the Bank of Uganda’s independence and for clear rules on how petroleum revenues are managed and withdrawn. The article also notes that the Fund sees regional monetary union as dependent on sustained convergence in inflation, debt, reserves and institutional readiness, rather than a fixed target date. More broadly, the exchange frames Uganda’s challenge as one of building credible institutions before its new sources of wealth and financial ambitions can be fully realized.