economy 18 March 2026 The Observer (Uganda)
Uganda's Public Debt Climbs to Shs 131 Trillion Amid Sustainability Debates
Uganda's total public debt reached $34.86 billion (Shs 131.2 trillion) by December 2025, up from $34.21 billion three months earlier, pushing the debt-to-GDP ratio to 52.7% despite significant servicing payments. While the government deems it sustainable, experts warn of high domestic interest burdens and call for better fiscal management. Source: https://observer.ug/news/ugandas-debt-rises-to-shs-131-trillion
Uganda’s public debt stock grew to $34.86 billion, equivalent to about Shs 131.2 trillion, at the end of December 2025. This marks an increase from $34.21 billion (Shs 128.7 trillion) in September 2025, even after servicing Shs 1.563 trillion in debt.
The debt now stands at 52.7% of GDP, exceeding the East African Community’s sustainability ceiling. Compared to neighbors, it tops Tanzania’s 48%, but the Finance Ministry argues it remains manageable, largely funding infrastructure tied to upcoming oil revenues.
Domestic debt dominates at 54.5% or $19.02 billion (Shs 68.86 trillion), with external debt at $15.84 billion (Shs 57.33 trillion). The rise came from higher local borrowing via treasury bills and bonds, as external commercial debt poses greater risks.
Multilateral lenders like IDA, IMF, and AfDF hold the bulk of external debt at 65.13%, mostly concessional. Key bilateral creditors include China’s Exim Bank ($2.1 billion) and UKEF ($0.39 billion), while Stanbic Bank leads private holdings at $0.82 billion.
Permanent Secretary Ramathan Ggoobi noted efforts to favor concessional loans, with their share rising slightly to 55.3%. External debt dipped marginally due to repayments outpacing new disbursements, but domestic stock surged.
IMF and World Bank assessments rate the debt sustainable with moderate distress risk, buoyed by growth and reserves, but vulnerable to deficits, oil delays, and climate shocks.
Critics like economist Dr. Fred Muhumuza challenge over-reliance on debt-to-GDP ratios, highlighting that over 30% of domestic revenue goes to interest—far above regional averages—straining health, education, and private investment. He warns of a ‘debt trap’ from politically motivated borrowing at 15-19% domestic rates.
Julius Mukunda of the Civil Society Budget Advocacy Group agrees, urging scrutiny of debt service versus revenue, project absorption, and spending discipline over the ratio alone. He emphasizes productive use of funds amid rising supplementary budgets.
Source: The Observer (Uganda)