Bank of Uganda Warns Parliament: Sovereignty Bill Could Trigger Economic ‘Disaster’
KAMPALA – The Bank of Uganda has issued a stark warning to Parliament, arguing that the proposed Protection of Sovereignty Bill 2026 poses severe risks to the nation’s economic stability, including the potential depletion of foreign reserves and a dangerous spike in inflation.
Appearing before lawmakers today, Governor Michael Atingi-Ego cautioned that the legislation, as currently drafted, could destabilise Uganda’s balance of payments and undermine the central bank’s core mandate of price stability.
“A country without reserves is not sovereign,” Atingi-Ego told MPs. He revealed that Uganda’s reserves have grown to nearly USD 6 billion, largely due to consistent foreign inflows – which last financial year produced an overall balance of payments surplus of USD 1.5 billion.
“The moment you tamper with these inflows, we risk running down our reserves, and that is economic disaster for a country,” he warned.
The Governor also delivered a stark inflation forecast. He explained that the Bill would likely trigger currency depreciation, which would directly push up the cost of imported goods.
“Because of the depreciation … the pass-through of imported items into domestic prices is going to raise prices significantly,” Atingi-Ego said. “This inflation of 3% we have been enjoying is likely to be compromised.”
He noted that the central bank would then face a difficult choice: tighten monetary policy further, raising interest rates, or allow inflation to breach the 5% target.
The Protection of Sovereignty Bill 2026 remains under parliamentary scrutiny.
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