Economists Predict Strong Dollar Despite Trump’s Foreign Aid Cuts

As the U.S. government scales back foreign aid to Africa, economists assure Ugandans that the country’s economic foundation remains solid despite the impact of former U.S. President Donald Trump’s decision to cut aid.

According to senior economist Dr. Fred Muhumuza, key factors such as booming coffee exports and high remittance inflows will cushion Uganda from the worst effects of reduced U.S. financial support and a potential dollar shortage.

“We have exports like coffee and strong remittance inflows that will keep us stable and ensure we don’t run short of dollars,” Muhumuza said. “However, if the aid freeze continues beyond 90 days, we could start feeling the impact.”

While Trump’s decision has unsettled several African economies, economists argue that Uganda’s foreign exchange reserves are strong enough to weather the storm.

Coffee remains a top export, with steady demand in international markets, while remittances from the Ugandan diaspora continue to bring in foreign currency. As a result, Uganda’s economy is expected to remain resilient in the short term.

However, in downtown Kampala, importers paint a different picture, warning of a looming crisis if the dollar shortage worsens.

Businesses that rely on imported goods are already feeling the strain, as rising exchange rates drive up import costs.

With the Ugandan shilling under pressure, many traders are advising their peers to stock up on dollars before further depreciation.

Some importers predict the exchange rate could soon hit Shs 3,800  U.S. dollar, up from the current rate, sparking fears of rising prices for essential goods, from food to electronics.

As Uganda navigates these economic shifts, industry experts continue to monitor the situation closely, urging businesses and policymakers to prepare for potential long-term effects.