Economy
Government Enforces Ban on Foreign Currency Use in Domestic Public Procurement
The government of Uganda has formally moved to enforce a long-standing directive barring all public contracting entities from conducting procurements and payments in foreign currencies, marking a significant step in preserving the integrity and value of the Uganda Shilling.
The directive, which has been reiterated multiple times since the 2016/2017 financial year, is now under strict enforcement following explicit instructions in the 2025/2026 Budget Execution Circular issued by the Permanent Secretary and Secretary to the Treasury (PSST), Ramathan Ggoobi.
“In line with the principles agreed upon with the Bank of Uganda, I wish to reaffirm this Ministry’s standing directive that since the budget is appropriated in Ugandan Shillings, all procurements and payments must be conducted in Uganda Shillings,” Ggoobi wrote in the circular.
Only Uganda’s foreign missions have been exempted from this directive, as they are permitted to transact using currencies valid in their host countries. Another limited exemption applies to procurements that are fully financed by foreign partners where agreements explicitly stipulate payment in foreign currencies.
Ggoobi stressed that enforcing domestic currency transactions would help safeguard the stability, competitiveness, and value of the Shilling, citing the cost pressures introduced by foreign exchange fluctuations.
“All contracts for works, goods and services shall be awarded in Uganda Shillings to hedge cost overruns due to global forex rate fluctuations that impact the stability of the Shilling,” he said.
The directive extends to all procurements conducted through the government’s electronic platforms, including the e-GP (electronic government procurement portal) and the Integrated Financial Management System (IFMS). All procurement processes must now be undertaken in Uganda Shillings—regardless of whether the bidding process is domestic or international—unless a financing agreement specifically provides otherwise.
According to Ggoobi, continued reliance on foreign currencies by local public institutions undermines Uganda’s monetary policy and exerts undue pressure on the exchange rate. He further noted that foreign currency use in government contracting introduces avoidable costs due to currency conversion and exposes the public purse to the risks of exchange rate volatility.
“Uganda collects its revenues in Uganda Shillings. Spending those revenues in foreign currencies not only adds costs but also fuels demand for foreign exchange, creating unnecessary pressure on the local currency,” Ggoobi explained.
The problem is compounded by the long procurement lead times common in government processes. According to the Public Procurement and Disposal of Assets Authority (PPDA), the average lead time for Open Domestic Bidding is 121 days, while Open International Bidding takes an average of 237 days. During these periods, currency appreciation can cause significant price increases in Shilling terms by the time payments are due.
The enforcement of this policy comes after years of resistance and lax compliance among public officials. In previous budget cycles, government accounting officers routinely sought approval to transact in United States Dollars and Euros, prompting repeated warnings from the Ministry of Finance.
In the 2023/2024 fiscal year, Ggoobi had already expressed frustration over the lack of compliance, noting that such practices were inconsistent with agreed fiscal and monetary policy frameworks.
The enforcement directive now places renewed responsibility on public accounting officers and the Attorney General’s chambers to ensure contracts adhere to the guidelines. It is a bold step toward aligning government expenditure with national economic objectives and curbing the erosion of the Uganda Shilling’s purchasing power.
With this latest move, Uganda joins a growing number of countries prioritizing local currency use in public financial management to bolster monetary sovereignty, stabilize national budgets, and minimize exposure to global economic shocks.
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