KAMPALA, Uganda — International Monetary Fund Managing Director Kristalina Georgieva warned that political interference in central banks threatens global economic stability, asserting that independence is essential for keeping inflation under control.
The IMF chief said that history shows a clear link between autonomous central banks and the ability to preserve financial stability. She noted that when central banks are subject to political pressure, it often results in loosened policies, weakened currencies and higher inflation expectations.
“Monetary policy credibility can also support fiscal stability by helping reduce risk premia,” Georgieva said. She added that building public trust requires central banks to enhance the quality of their inflation forecasts, a task that has become increasingly difficult in a world prone to frequent economic shocks.
The Bank of Uganda is currently navigating these challenges by maintaining a flexible policy framework. In its latest state of the economy report, the central bank emphasized that preserving price stability is the foundation for the nation’s tenfold growth strategy, which focuses on industrialization and value addition.
To cushion the country against global risks, the Bank of Uganda has maintained gross foreign reserves of $4.711 billion as of August 2025. Economists at the bank said this buffer is necessary to protect against volatile commodity prices and rising geopolitical tensions.
Georgieva also highlighted that rising fiscal risks, such as high debt and deficits, can compromise the credibility of monetary policy. She called for enhanced oversight and systematic liquidity stress testing to guard against abrupt asset price corrections and disruptions in foreign exchange markets.
The IMF is closely monitoring vulnerabilities across emerging markets, including climate risks and the growing influence of non-bank financial institutions. Georgieva urged policymakers to act decisively to unlock private sector-led growth while maintaining the integrity of core national economic institutions.
