Uganda Government raises Shs767 billion from treasury auctions in April

The Ugandan government raised Shs. 767.55 billion in April 2025 from three auctions of Treasury Bills and Bonds on the domestic market, according to the Performance of the Economy report for March 2025 released by the Ministry of Finance, Planning and Economic Development.

Of the total amount mobilised, Shs. 452.43 billion was used to refinance maturing government securities—part of the ongoing effort to manage the country’s domestic debt obligations. The remaining Shs. 315.12 billion was directed toward financing other components of the national budget, reflecting continued reliance on the domestic debt market for fiscal support.

The auctions were met with strong investor appetite, with all Treasury Bill offers oversubscribed. The average bid-to-cover ratio—a key measure of demand—stood at 1.67, indicating that bids exceeded the amount offered by nearly 70%.

Treasury Bill Yields See Mixed Movement

Yields on short-term government securities saw a decline in April, signaling increased investor confidence and liquidity in the market. The 91-day Treasury Bill yield fell to 9.5%, down from 11.3% in March, while the 182-day Bill dropped to 12.8% from 13.2%.

These rates returned to levels last seen in April 2024, a move that analysts say could reduce short-term borrowing costs for government and may influence the pricing of commercial loans by banks.

In contrast, the 364-day Treasury Bill yield rose modestly to 15.1% from 14.8% in March, reflecting slightly higher investor expectations for returns on longer short-term placements amid inflationary pressures and fiscal uncertainties.

Bond Market Stable with Minor Adjustments

Yields on Treasury Bonds remained largely stable. The 2-Year and 15-Year tenor bonds held steady at 15.75% and 17.00% respectively. Only the 5-Year bond registered a slight upward adjustment, rising from 16.25% in March to 16.5% in April.

The stability in bond yields suggests that long-term investor sentiment remains cautiously optimistic, with confidence in the government’s debt servicing ability. However, the marginal increase in the 5-Year bond may reflect investor sensitivity to medium-term fiscal risks.

Broader Context

The robust performance of domestic securities auctions in April reflects a deepening local capital market, with increased participation by commercial banks, pension funds, and institutional investors seeking relatively safe returns.

However, Uganda’s rising domestic debt servicing obligations remain a point of concern. A growing portion of budgetary resources is being channeled toward refinancing existing debt, limiting the fiscal space available for development priorities like infrastructure, health, and education.

The Finance Ministry has emphasized the importance of maintaining investor confidence and managing borrowing costs to ensure sustainable debt levels. Continued macroeconomic stability, enhanced revenue collection, and disciplined expenditure will be essential to reducing reliance on domestic debt in the long run.

The government’s ability to maintain low yields while meeting its financing needs in April is a positive signal. Still, market watchers will be looking closely at inflation trends, global interest rates, and fiscal consolidation measures in the months ahead to assess the trajectory of Uganda’s public debt dynamics.