Government has said it has started a process that will see some of the country's gold reserves stored in local vaults.
The State Minister for Foreign Affairs, Henry Okello Oryem said on Tuesday that this will be finalized soon.
"We are now in the process of studying, and a paper is being developed for Bank of Uganda to start procuring gold so that we have gold reserves in this country and not only gold reserves abroad. We have about US$4 Million of foreign reserves vis-as-vie our GDP. We stand the risk of United States imposing sanctions of freezing all that money and we are finished as a country," said Oryem.
He was speaking in parliament.
Oryem also defended the move by Bank of Uganda to start purchasing gold from local miners, saying it is intended to shield Uganda from threats from United States in case the nation unceremoniously freezes Uganda's gold reserves.
Bank of Uganda last year announced it had started buying gold from the local market to beef up its foreign reserves.
"The BOU, in consultation with relevant key stakeholders, has initiated a Domestic Gold Purchase Program with the objectives of building the country's foreign reserves and minimizing risks on reserves investments," BoU said in the State of the Economy report for June 2024.
"The gold purchase program will help in accumulating foreign currency reserves and address the associated risks in the international financial markets."
The Central Bank also noted that by purchasing gold directly from the artisanal miners, it would also be supporting the livelihoods of artisanal and small-scale miners, "and this has positive spill-over effects on other sectors of the economy in line with the Bank's mission to support socio-economic transformation."
BoU recently introduced stringent guidelines for purchasing gold from the local market that it said aimed at safeguarding the integrity of its gold acquisition program.
The initiative is part of the Central Bank's broader strategy to boost foreign reserves, diversify risks, and reduce reliance on traditional foreign currency reserves.
In a presentation to Parliament's Committee of Commissions, Statutory Authorities, and State Enterprises (COSASE), BoU outlined the guidelines, which emphasize direct sourcing from artisanal, small, medium, and large-scale miners.
The approach aims to ensure traceability and authenticity, avoiding the inclusion of gold from other nations. A pre-qualification process will also be instituted for gold suppliers and refineries to meet quality and purity standards.
BoU's Deputy Governor, Michael Atingi-Ego, highlighted the significance of gold as a stable asset during global economic instability.
"Gold's liquidity, safety, and historical performance as a store of value make it a vital reserve asset. By diversifying Uganda's reserves, we enhance financial resilience," he said.