Uganda’s national debt has surged to approximately Shs116 trillion, crossing a symbolic economic threshold as the country’s debt-to-GDP ratio moves above 50 percent. Despite the sharp increase, government officials insist the situation remains under control, citing fiscal consolidation efforts, stronger domestic revenue mobilisation, and anticipated oil revenues as key buffers against long-term instability.
According to the latest Debt Sustainability Analysis (DSA), Uganda’s total public debt rose to $32.24 billion in the Financial Year 2024/25, up from $25.59 billion in FY 2023/24. The nearly $6.65 billion jump reflects expanded borrowing to finance development projects, repay domestic advances, and accelerate investment in strategic sectors such as oil and gas.
Debt-to-GDP Ratio Crosses 50 Percent Mark
The report shows that Uganda’s debt-to-GDP ratio increased from 46.6 percent in June 2024 to 50.9 percent by June 2025. While the crossing of the 50 percent threshold may raise concerns among economists and investors, officials argue that the country remains within internationally accepted sustainability benchmarks.
In present value terms – which measure the real economic burden of debt – the stock stood at 45.3 percent of GDP, compared to 40.4 percent the previous year. Authorities emphasize that present value calculations provide a more accurate picture of long-term fiscal pressure than nominal figures alone.
Drivers Behind the Debt Surge
Several factors contributed to the significant rise in Uganda’s debt stock. One of the primary elements was the repayment of advances previously secured from the Bank of Uganda. In addition, increased public investment in infrastructure and energy projects required substantial financing.
A major component of recent borrowing has supported Uganda’s preparations for first oil production. As the country approaches commercial oil extraction, capital-intensive projects in the petroleum sector have intensified. Government views these investments as critical to unlocking future revenue streams.
Development spending in transport infrastructure, industrial parks, and energy expansion has also contributed to higher borrowing levels. Officials argue that such investments are essential for accelerating economic growth and expanding the country’s production base.
Government’s Fiscal Consolidation Strategy
The Ministry of Finance maintains that Uganda’s debt trajectory remains manageable under its fiscal consolidation framework. Ramathan Ggoobi, the Permanent Secretary and Secretary to the Treasury, stated that the Debt Sustainability Analysis offers a structured roadmap for future borrowing decisions.
According to Dr Ggoobi, the government’s approach rests on three pillars: boosting domestic revenue collection, rationalising public expenditure, and implementing the ten-fold growth strategy aimed at significantly expanding the size of the economy.
Revenue mobilisation efforts include strengthening tax administration systems, widening the tax base, and improving compliance. Authorities believe that sustained revenue growth will gradually reduce reliance on external borrowing.
Expenditure rationalisation involves prioritising high-impact projects while containing non-essential spending. This approach aims to improve efficiency without undermining development objectives.
Oil Revenues as a Turning Point
A central element in the government’s sustainability argument is the anticipated flow of oil-related income once commercial production begins. Officials project that oil exports will significantly enhance foreign exchange earnings and fiscal revenues.
Oil proceeds are expected to strengthen debt servicing capacity and support broader macroeconomic stability. Authorities argue that early borrowing to develop oil infrastructure represents a strategic investment that will yield long-term returns.
However, economists caution that oil revenue projections depend on global price stability and effective governance frameworks to ensure prudent resource management.
Balancing Development and Discipline
Uganda’s development agenda requires substantial capital investment to modernise infrastructure, promote industrialisation, and increase export competitiveness. At the same time, rising debt levels necessitate disciplined fiscal oversight.
The government contends that growth-driven borrowing remains justified if it finances productive assets that stimulate economic expansion. Industrial growth, export diversification, and enhanced value addition are expected to raise GDP and gradually lower the debt ratio.
Authorities also highlight that Uganda’s debt portfolio includes a mix of concessional and non-concessional loans, with concessional borrowing offering lower interest rates and longer repayment periods.
Outlook and Policy Direction
While the rise in public debt reflects intensified development financing, officials maintain that Uganda’s medium- and long-term debt outlook remains stable under current policy measures. The Debt Sustainability Analysis serves as a guiding framework for aligning borrowing with growth objectives.
As the country approaches first oil production and continues implementing structural reforms, the government faces the dual challenge of maintaining fiscal discipline while sustaining economic momentum. Policymakers argue that disciplined borrowing combined with strategic growth investments will stabilise Uganda’s debt path over time.
