Uganda’s Current Account Deficit Narrows to US$3.6 billion — Momentum for Growth Amid Vigilance Required
ByThe Urban Gazette Economic Desk
Kampala,Uganda
According to the Bank of Uganda (BoU), Uganda’s current account deficit (CAD) in the year to June 2025 narrowed significantly to approximately US$3.6 billion from US$4.2 billion a year earlier.
This improvement is underpinned by rising export receipts (US$10.6 billion vs US$7.8 billion previously) driven mainly by higher prices in gold, coffee and cocoa and a moderate volume increase. Meanwhile, though imports rose to US$13.2 billion from US$10.8 billion, falling prices for key import categories (except oil) helped moderate the increase.
At the same time, the financial account registered a stronger surplus (US$4.5 billion vs US$2.5 billion), largely reflecting stronger direct and portfolio investment inflows, and other investment categories turning positive. Reserves climbed to US$4.3 billion (about 3.9 months of import cover) up from US$3.2 billion a year earlier (3.1 months).
Why it matters
A narrowing CAD signals improved external resilience for Uganda, reducing vulnerability to external shocks.
Strong export performance (especially in commodities like gold, coffee) suggests Uganda is leveraging its natural-resource strengths.
The build up in foreign reserves gives BoU more buffer in managing currency volatility and import‐shock risk.
However: BoU cautions that global dynamics may reverse the trend — lower commodity prices and a weakening US dollar may increase the trade deficit going forward.
For businesses and investors: this is a positive signal, but should not lead to complacency — underlying structural issues remain (fiscal deficits, high public debt, infrastructure constraints).
What’s next
The Government has indicated plans to reduce public spending and domestic debt issuance in the 2026/27 financial year.
Monitoring is needed of how export diversification (beyond raw commodities) evolves — Uganda added 20 new products to its export basket in the past decade, per government statement.
Investors should track how the revenue side (especially from upcoming oil production) and the trade side interact — Uganda expects crude output mid-2026, which may shift dynamics.
