Uganda's Public Debt Strategy Ensures Sustainability Amid Critics' Concerns

Uganda’s government views public debt as a key tool for funding national development and socio-economic progress, aligned with Vision 2040 and the Tenfold Growth Strategy. Borrowing bridges the gap between domestic revenues and investments in growth drivers like agro-industrialization, tourism, minerals, oil and gas, and science and technology.

Recent skepticism from commentators about debt obligations has been dismissed, with officials pointing to the 2024/25 Debt Sustainability Analysis (DSA) that affirms sustainability. Debt servicing remains a top budget priority to maintain macroeconomic stability and creditworthiness.

Total public debt reached $32.24 billion (Shs121 trillion) in FY 2024/25, at 50.9% of GDP, but the DSA stresses adherence to fiscal consolidation, including boosting domestic revenues to 18% of GDP via the Domestic Revenue Mobilisation Strategy. Projections show collections rising to Shs40 trillion next year from Shs34 trillion this FY.

Over the past decade, borrowed funds have fueled key sectors: 29% on roads and bridges, 27.6% on electricity, 14% on internet and innovation, 11.5% on water, and 5.8% on agro-industry. These have spurred private sector expansion, FDI, and post-Covid recovery, positioning Uganda among the world’s fastest-growing economies.

Future plans include prioritizing concessional loans from the World Bank and IMF, sequencing borrowing to cut costs, and using commercial loans only for high-return ATMS projects. Coordination between the Ministry of Finance and Bank of Uganda will sustain stability.

Officials argue debt is for transformation, not consumption, and evidence of economic expansion counters alarmist views.

Source: Daily Monitor (Uganda)