Ugandan economist Dr. Fred Muhumuza has voiced concerns regarding the Bank of Uganda’s recent decision to increase its benchmark interest rate to 12%. He argues that this move is misguided given the ongoing issues of government borrowing and consistent fiscal deficits within Uganda. According to Muhumuza, these underlying economic problems are significantly distorting investment decisions throughout the country. He believes this distortion weakens the productive sectors that are crucial for generating foreign exchange earnings. The 2.25 percentage-point increase, he suggests, will not effectively address the root causes of Uganda’s economic challenges. Muhumuza’s criticism centers on the idea that addressing fiscal imbalances is more critical than simply adjusting interest rates to manage the situation. The economist’s comments were reported by The Independent Uganda news outlet.