A proposed Ugandan law aimed at curbing external influences in politics could trim its foreign exchange reserves and trigger inflationary pressures, the country's central bank governor said.

A parliamentary committee is at present holding public hearings on the planned law, "The Protection of Sovereignty Bill, 2026" which was introduced to parliament on April 15.

The planned law says any Ugandan receiving money from outside the country must register as a foreign agent, acquire a certificate from the government and disclose all incoming funds among other provisions.

Central Bank Governor Michael Atingi-Ego said this would diminish financial flows into the East African country and destabilise the country's balance of payments.

"The moment you tamper with these inflows here, we risk running down our reserves, and that is economic disaster for a country," he said in comments posted on the bank's X social media account late on Tuesday.

"Because of the depreciation of the currency that is likely to occur as an unintended consequence of this bill... our inflation is going to increase via the depreciation of the exchange rate."

The World Bank has also objected to the proposed legislation saying the law could expose to criminal liability a broad range of its development activities in the country including organising meetings in which alternative policy ideas are discussed.

The law has also received broad criticism from charities, commercial banks, rights activists and political opposition but the government has dismissed the concerns as unwarranted.