IMF Warns BoU Over Growing Forex Borrowing as Gold Reserve Plan Unfolds

The International Monetary Fund (IMF) has warned the Bank of Uganda (BoU) about its increasing reliance on short-term foreign currency borrowing, which nearly doubled to $770 million in 2026. This comes as the central bank implements a new gold reserve plan, aiming to strengthen national reserves by purchasing local gold and refining it.

According to the IMF's 2026 report, Uganda's cross-currency repurchase agreements (repos) have increased significantly, raising concerns about potential risks such as refinancing pressure, market losses, and weaker reserve quality. Repos allow the central bank to access foreign currency quickly by using assets as collateral, but funds must be repaid or rolled over.

The IMF also highlighted broader concerns related to illegal mining, money laundering risks, and weak oversight in the gold supply chain. The Fund urged Uganda to strengthen supervision and governance of the gold initiative, exercise caution in expanding short-term borrowing through repos, and prioritize steady reserve accumulation through sustainable foreign exchange inflows.