economy 21 September 2026 The Observer (Uganda)
Uganda's Public Debt Hits Shs 137 Trillion, Bank of Uganda Warns of Borrowing Risks
Uganda's public debt has climbed to Shs 137.4 trillion, prompting the Bank of Uganda (BoU) to issue a stark warning about the dangers of excessive domestic borrowing and its potential to crowd out private sector investment. Source: https://observer.ug/news/ugandas-public-debt-rises-to-shs-137-trillion-as-bou-warns-over-reckless-borrowing
Uganda’s national debt has surged to a concerning Shs 137.4 trillion, equivalent to 52.7% of the Gross Domestic Product (GDP) as of December 2025. This significant increase, with domestic debt alone reaching Shs 68.86 trillion, has prompted the Bank of Uganda (BoU) to voice serious concerns.
Governor Dr. Michael Atingi-Ego cautioned parliament that while the domestic market can accommodate the planned borrowing for the upcoming fiscal year, exceeding projected levels risks tightening credit conditions for businesses. This could hinder private sector growth and investment.
The central bank is urging for greater parliamentary oversight of public borrowing and expenditure, advocating for stronger compliance with fiscal rules. The BoU also suggests annual assessments of debt sustainability and regular reporting on how government financing strategies impact private sector access to credit.
These warnings come as the government acknowledges that several targets under the previous Charter for Fiscal Responsibility were missed. Factors contributing to this include weaker-than-expected revenue collection, increased spending, delayed oil production, and higher borrowing.
High interest payments are a significant burden, with projections indicating they will consume nearly one-third of domestic revenue in FY2025/26. The weighted average interest rate on total public debt has risen, with domestic debt carrying a particularly high rate of 15.5%.
Furthermore, a substantial portion of domestic debt is due for repayment in the short term, necessitating continuous refinancing by the government. While tax collections have shown some improvement, overall government revenue, including grants, has lagged behind targets.
Looking ahead, the government’s new fiscal framework projects debt peaking at 55.1% of non-oil GDP before declining. However, the International Monetary Fund (IMF) has echoed concerns about Uganda’s increased debt vulnerabilities, recommending robust revenue mobilization and expenditure reforms to ensure a sustainable debt path.
Source: The Observer (Uganda)