Bank of Uganda made a $216.8m drawdown from the reserve account during the quarter ended February to fund a widening deficit resulting from growth in the import bill. This was a result of growing demand for imports amid a slowdown in dollar inflows and low export receipts.
The drawdown, therefore, resulted into a slight decline in the duration of foreign exchange reserve cover for imports from 4.4 months to 4.3 months. According to the Bank of Uganda Monetary Policy report, the stock of reserves estimated for the quarter ended February declined to $3.5b (4.3 months of imports cover) down from $3.6b (4.4 months of import cover) as of November 2020.