MP Paul Omara Urges BoU to Act as Shilling Depreciation Threatens Economy

What the report says

Otuke County MP Paul Omara has called on the Bank of Uganda to do more to steady the weakening shilling, arguing that the currency’s decline could raise inflation, increase import bills and make it more expensive for government to service external debt. His remarks, reported by Nile Post, came in the context of renewed debate over whether a softer shilling helps exporters or hurts the wider economy.

Omara disputed President Museveni’s view that depreciation can benefit exporters, saying those gains may be limited when global commodity prices are falling and production cannot quickly rise. He pointed to coffee as an example and said lower export prices could reduce dollar earnings even if the shilling value of receipts appears stronger. He also warned that costs for fuel, medicines, machinery and other imported inputs are likely to rise and be passed on to consumers.

The MP’s intervention followed the Bank of Uganda’s decision to raise its Central Bank Rate to 12%, a move the central bank said was meant to address inflation pressures. Omara argued that monetary tightening alone would not be enough if government spending and domestic borrowing remain high, and he urged coordination between the central bank and the Ministry of Finance.

He proposed a mix of measures, including cautious foreign exchange intervention, tighter liquidity management, reduced non-essential spending, lower domestic borrowing and support for agriculture to ease food-price pressure. In the broader policy debate, the issue matters because a volatile exchange rate can affect prices, debt servicing and business costs across Uganda’s economy.