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Uganda’s Public Debt Remains Sustainable Despite Growing Debt Burden

Corporate editorUpdated 1 hour Ago2 Mins read16

Uganda’s public debt remains sustainable over the medium to long term despite a significant increase in the country’s overall debt stock, Finance Minister Henry Musasizi has told Parliament.

Musasizi, together with officials from the Ministry of Finance, Planning and Economic Development, appeared before the Parliamentary Committee on the National Economy to discuss Uganda’s public debt position, debt sustainability, external financing, contingent liabilities and domestic arrears.

According to the Minister, Uganda’s total public debt increased by 19.96%, rising from US$29.06 billion (Shs105.17 trillion) at the end of December 2024 to US$34.86 billion (Shs126.16 trillion) by December 2025.

Of the total debt, US$15.84 billion was external debt, while US$19.02 billion was domestic debt. Musasizi attributed the increase largely to increased domestic borrowing to finance the fiscal deficit, alongside continued borrowing for strategic infrastructure investments intended to support economic transformation and long-term growth.

He told legislators that the sustainability of Uganda’s debt should not be assessed solely by the size of the debt stock, but also by the country’s ability to service its obligations.

Debt-to-GDP ratio rises

Uganda’s nominal public debt rose from 46.86% of GDP in June 2024 to 50.90% in June 2025.

Despite the increase, Musasizi said the Government remains confident that the debt is sustainable, pointing to measures aimed at strengthening domestic revenue mobilisation, controlling public expenditure and improving spending efficiency.

He also cited the anticipated benefits of oil revenues and implementation of the Government’s Ten-Fold Growth Strategy as key components of the country’s long-term economic outlook.

However, the Minister acknowledged that the rising debt stock presents risks, particularly through the growing cost of debt servicing.

Government, he said, will continue to prioritise concessional and cost-effective financing, strengthen debt management and ensure borrowed funds are channelled into productive investments capable of generating economic returns.

$18.23 billion in external financing commitments

Musasizi also disclosed that commitments for ongoing externally financed projects and programmes stood at US$18.23 billion as of December 2025.

Of this amount, US$8.59 billion had been disbursed, representing 47.16% of the committed financing.

Government is working with implementing agencies and development partners to accelerate project implementation and disbursement while ensuring that externally financed projects deliver their intended economic and social benefits.

Government owes Shs8.68 trillion in domestic arrears

On domestic arrears, the audited stock for the 2024/25 financial year stood at Shs8.68 trillion.

Central Government accounted for Shs8.54 trillion (98.45%), while Local Governments accounted for Shs134.83 billion (1.55%).

The Minister said Government is strengthening commitment controls and expenditure management while enforcing the Public Finance Management framework to prevent the accumulation of new arrears.

Government also intends to progressively clear verified and approved obligations. Government maintains debt sustainability position.

Despite the rising debt burden, Musasizi reaffirmed Government’s commitment to responsible borrowing and prudent debt management.

The focus, he said, will remain on productive investment, fiscal sustainability, stronger domestic revenue mobilisation and ensuring value for money from borrowed resources.

Uganda’s rising debt stock and the increasing cost of servicing it are expected to remain key issues in the country’s fiscal management as Government seeks to finance infrastructure and other investments while maintaining long-term economic stability.