Uganda’s escalating debt burden is drawing increasing concern from civil society and opposition leaders. They warn that citizens are bearing the cost of rising loans, which is hurting essential services.
Julius Mukunda, Executive Director of the Civil Society Budget Advocacy Group (CSBAG), criticized Parliament for approving a Shs9.1 trillion loan. He argued that the government’s growing borrowing has placed the burden on ordinary Ugandans. Tax revenues, which should fund vital public services, are instead being used to pay debt interest. Mukunda explained that Shs30 of every Shs100 collected in taxes goes toward debt servicing. This amount has significantly increased from the Shs12.5 initially estimated.
Uganda Debt Crisis: Rising Debt Servicing Costs
Debt servicing now consumes 31.5% of Uganda’s domestic revenue, taking away funds from crucial sectors like health, education, and agriculture. Mukunda warned that debt has become more than a macroeconomic concern; it now threatens essential service delivery.
According to the Ministry of Finance, Uganda’s total public debt reached Shs116.2 trillion ($32.3 billion) by June 2025. External debt stands at Shs55.9 trillion, while domestic debt totals Shs60.3 trillion. As a result, the debt-to-GDP ratio has climbed to 51.3%, raising concerns about the country’s fiscal health.
Increased Borrowing and Expensive Domestic Loans
Parliament’s recent approval of loans worth Shs9.6 trillion adds to the mounting debt burden. Opposition leader Joel Ssenyonyi has warned that Uganda is entering the “red zone” regarding debt sustainability. He emphasized that Uganda is no longer borrowing from a position of strength. The government must be cautious moving forward.
Civil society groups are also concerned about Uganda’s reliance on expensive domestic borrowing. The interest rates for domestic loans range from 15–17%, compared to just 2–3% for concessional external loans. Mukunda noted that Uganda’s interest payments have surged from Shs3 trillion in 2019 to Shs7 trillion in FY2025. For every Shs100 collected in taxes, Shs25 is now used for debt servicing, leaving fewer resources for critical public services.
Oil Revenue at Risk: Rising Debt Could Absorb Future Gains
Mukunda warned that Uganda’s anticipated oil revenue may be absorbed by debt repayments if borrowing trends continue. S&P Global Ratings projects oil production could peak at 230,000 barrels per day by 2030, contributing 1–2% of GDP annually. However, Mukunda stressed that mismanagement of the country’s debt could undermine the benefits of Uganda’s oil sector.
He urged the government to focus on prioritizing service delivery and national content policies to ensure that oil revenues benefit the people. Mukunda highlighted that many Ugandans suffer due to inadequate medical care, which results from mismanaged priorities rather than a lack of resources.
