The Uganda debt crisis is placing growing pressure on the country’s 2025/26 national budget. With public debt now over Shs106 trillion, more than 55% of the country’s GDP, the government must choose between paying loans or funding key sectors like education and health.
Over the past 10 years, Uganda has borrowed over Shs43 trillion. According to the Uganda Debt Network (UDN), debt rose from $35.1 billion in FY2018/19 to $46.8 billion in FY2023/24. That’s a 105% increase in just six years. This growth has left the government with less room to fund development projects.
In 2025/26, the government expects to spend about 40% of every Shs100 collected on debt payments. This is up from Shs32 per Shs100 in the previous year. That shift puts more pressure on the limited budget.
Of the Shs72.3 trillion budget, officials say only Shs43 trillion will be available for actual spending after fulfilling debt and statutory obligations. Shs26 trillion will go to domestic debt rollover, interest payments, and debt amortization, as noted by Dr. Adam Mugume of the Bank of Uganda.
Still, Treasury official Patrick Ocailap argues that the 2025/26 budget isn’t fully debt-dependent. He says the government expects to collect Shs33.9 trillion from local sources like the Uganda Revenue Authority. He insists that only a small portion—just over Shs3 trillion—will be borrowed for budget support.
But experts remain cautious. Madina Guloba from the Economic Policy Research Centre warns that debt servicing will absorb around Shs27.58 trillion, leaving less than Shs10 trillion from domestic revenue for critical sectors. She believes Uganda must broaden its tax base and improve tax collection.
The Budget Committee projects the debt-to-GDP ratio will reach 53.34% in 2025/26. That’s above the government’s own target of 49.3%. Experts say this weakens budget flexibility and limits Uganda’s ability to borrow affordably in the future.
Julius Mukunda of the Civil Society Budget Advocacy Group adds that Uganda can only self-finance about 47% of its budget. The rest must come from borrowing, which will raise the debt burden even more. He warns that borrowing at non-concessional rates from domestic markets limits private sector credit and slows economic growth.
Each Ugandan would need to pay about Shs2.5 million to clear the national debt, according to the Uganda Debt Network. That’s a heavy burden on a population still grappling with poverty and limited access to services.
To ease this crisis, Mukunda suggests cutting non-essential spending such as travel and allowances. He also backs the Rationalization of Government Agencies and Public Expenditure (RAPEX) policy, which seeks to eliminate duplication in public service roles.
Guloba recommends strict fiscal discipline, better budget alignment, and transparent spending. She says Uganda must plan with real costs in mind, avoid off-budget activities, and make sure budget allocations match actual results.
In conclusion, the Uganda debt crisis has reached a point where it directly limits how much the government can spend on critical services. While local revenue will cover some of the costs, debt servicing remains the top priority. Uganda’s leaders must now focus on smarter tax collection, tighter spending controls, and more efficient use of borrowed funds to avoid further economic strain.
