Uganda’s public debt stock expanded to UGX130.844 trillion (€32.1 billion) by the end of December 2025, Pedson Mumbere reports, reflecting sustained fiscal pressures and an increased reliance on domestic financing, according to the Ministry of Finance’s Quarterly Debt Statistical Bulletin.
The latest position represents a rise from UGX128.648 trillion (€31.5 billion) recorded in September 2025, underscoring the government’s continued recourse to borrowing to bridge budget financing gaps and support public investment.
A breakdown of the debt portfolio shows that domestic debt remains the dominant component, accounting for 54.5 percent of the total at UGX68.86 trillion (€16.9 billion), while external debt stands at 45.3 percent, equivalent to UGX57.33 trillion (€14.1 billion).
The quarterly expansion is primarily attributed to increased issuance of government securities in the domestic market, including Treasury bills and bonds.
From a macroeconomic perspective, the shift toward domestic borrowing signals a strategic effort to limit exposure to external shocks, particularly foreign exchange volatility. However, it also introduces tightening liquidity conditions within the financial system.
In a phone interview, Ibrahim Mugume, a senior economist at the Economic Policy Research Centre (EPRC), told this publication that while domestic financing offers greater policy control, it carries implications for private sector activity.
“Elevated domestic borrowing by government tends to exert upward pressure on interest rates, potentially crowding out private sector credit and dampening investment momentum,” Mugume said. “This dynamic could weigh on medium-term growth prospects if not carefully managed.”
On the external side, Uganda’s debt portfolio remains heavily concentrated among multilateral lenders, which account for 65.13 percent of total external obligations, equivalent to $10.32 billion (approximately UGX38.5 trillion).
Key institutions include the International Development Association (IDA), the International Monetary Fund (IMF), and the African Development Fund (AfDF), collectively holding more than half of the external debt stock.
Bilateral exposures are led by China’s Exim Bank at $2.1 billion (UGX7.8 trillion), followed by UK Export Finance at $0.39 billion (UGX1.45 trillion). Among private creditors, Stanbic Bank holds a leading position with $0.82 billion (UGX3.05 trillion).
In terms of debt servicing, the government recorded a decline in domestic debt service obligations during the quarter, with expenditure falling by UGX916 billion to UGX2.997 trillion (€735 million), down from UGX3.913 trillion (€959 million) in September 2025. While this development provides short-term fiscal relief, analysts caution that it may not offset the broader implications of a rising debt stock.
At the same time, undisbursed debt — committed financing yet to be drawn — increased to $3.74 billion (UGX14.032 trillion) from $3.36 billion (UGX12.606 trillion).
The growth reflects new loan commitments from multilateral and private financiers across key sectors, including education, agriculture, and trade finance.
Notable facilities include funding from the African Development Fund for biomedical sciences education, the Arab Bank for Economic Development in Africa (BADEA) for trade finance, the International Fund for Agricultural Development (IFAD) for livestock resilience, and additional credit lines extended to the Uganda Development Bank by the OPEC Fund.
Mugume emphasizes that rising undisbursed balances point to underlying inefficiencies in project execution.
“Persistent growth in undisbursed debt suggests bottlenecks in project implementation and absorption capacity. This not only delays economic returns but may also result in additional costs, including commitment fees,” he noted.
Overall, the trajectory of Uganda’s public debt highlights emerging risks to fiscal sustainability and underscores the need for a calibrated financing strategy.
While the Ministry of Finance maintains that the debt remains within sustainable thresholds, the evolving structure of the debt portfolio calls for strengthened domestic revenue mobilisation, disciplined expenditure management, and a sharper focus on high-return public investments.
As fiscal pressures mount, the balance between sustaining development spending and maintaining debt sustainability will remain central to Uganda’s macroeconomic stability and long-term growth outlook.
