Uganda’s government raised more than UGX4.43 trillion from the sale of government securities in May 2025, according to the Performance of the Economy Report for May 2025 released by the Ministry of Finance, Planning and Economic Development. This figure represents an increase in borrowing through Treasury Bills (T-Bills) and Treasury Bonds (T-Bonds) to support budget implementation and manage public debt obligations. When government spending exceeds tax revenue collections, it covers the gap by borrowing. Issuing securities through the Central bank is the main way to borrow money domestically or internationally. Governments often issue new securities to repay maturing ones—this is called rolling over debt. Through the Central bank, the governments can also use securities as a monetary policy tool given that selling securities removes money from circulation hence reducing inflationary pressures. Of the total funds raised, UGX 755.5 billion came from T-Bills, while the larger portion UGX 3.673 trillion was raised from T-Bonds. The government allocated UGX2.42 trillion of this amount towards refinancing maturing securities, and UGX2.0 trillion was used to finance other items in the national budget. “This increase in domestic borrowing reflects the government’s strategy to manage short-term liquidity needs and sustain public investment amidst revenue collection challenges,†the report notes in part. During the month, the government re-opened 3-year, 10-year, and 20-year tenor bonds on the primary market, with higher yields for the investors, rising to up to 17.5%. The yield is the return an investor earns from holding a security, basically a measure of how profitable an investment in the security is. Yields on these instruments rose compared to the previous auction. Specifically, yields for the 3-year, 10-year, and 20-year bonds increased to 16.5%, 17.5%, and 17.9% respectively, from 16.2%, 17.1%, and 17.5% in the previous sale. This upward trend in interest rates was partly attributed to increased borrowing requirements by the government during the month. Yields on Treasury Bills also reflected mixed performance. The 91-day and 364-day T-Bills saw interest rates rise to 12.1% and 15.4% in May 2025, up from 9.5% and 15.1% in April 2025, respectively. Consequently, all auctions for Treasury Bills were oversubscribed. In a related development, Uganda’s private sector credit stock experienced a modest increase of 0.8% from UGX 26.16 trillion in March 2025 to UGX 26.38 trillion in April 2025. This rise followed increased disbursements particularly to key sectors such as agriculture, manufacturing, and transport and communication. Out of the total stock of private sector credit in April 2025, about UGX 6.76 billion was denominated in foreign currency, while UGX 16.75 trillion was Shilling-denominated. The increase in credit to productive sectors signals a continued economic recovery and stronger private sector activity. The report notes that these developments in the government securities market and private sector lending “reflect a stable macroeconomic environment with improving investor confidence and active participation in both primary and secondary markets.†As the government continues to rely on domestic borrowing to bridge fiscal gaps, the trend of rising yields and increased private sector credit uptake points to an evolving financial landscape that demands strategic debt management and targeted fiscal interventions.
