Ugandan Parliament set for special sitting over Shs2.17 trillion borrowing

Parliament will next Tuesday reconvene for a special sitting that could further stretch Uganda’s already tight fiscal position, as lawmakers are asked to approve new borrowing totalling more than Shs2.17 trillion.

The December 16 sitting comes against a backdrop of mounting concern over the government’s reliance on debt to finance infrastructure and recurrent pressures, barely weeks after Parliament approved Shs8.1 trillion in supplementary spending for the 2025/26 financial year.

In a formal notice to Members of Parliament, the Clerk to Parliament, Mr Adolf Mwesige Kasija, said plenary would resume at 2:00pm to receive the National Budget Framework Paper for FY 2026/27–2030/31, a key document that sets government spending priorities over the medium term.

The day’s business, according to the Order Paper, will open with the presentation of the Tax Expenditure Report for July–September 2025, followed by consideration of a request to waive tax arrears owed by NewPlan Limited. The session will then turn to three high-value financing motions from the Ministry of Finance.

The first seeks parliamentary approval to pre-finance the design and construction of the 87-kilometre Kayunga–Bbaale–Galiraya Road, which the government plans to upgrade from gravel to paved standard. The second proposes borrowing USD 162 million (about Shs579.2 billion) from the Korea Export-Import Bank to fund the Makerere University Improvement Project, aimed at modernising infrastructure and expanding academic facilities.

The largest request involves external financing of EUR 385 million (approximately USD 448 million or Shs1.595 trillion) from Rand Merchant Bank and other lenders to support the wider infrastructure and development budget for FY 2025/26. Together, the three loans amount to USD 610 million (Shs2.172 trillion).

Lawmakers will also debate the Energy Efficiency and Conservation Bill, 2024, which is scheduled for its second and third readings, adding a policy dimension to a sitting otherwise dominated by fiscal decisions.

The borrowing proposals have reignited concerns raised during recent debates on supplementary expenditure, where opposition MPs warned that Uganda risks normalising fiscal indiscipline. Kira Municipality MP and Shadow Finance Minister Ibrahim Ssemujju Nganda argued that successive supplementary budgets, largely financed through borrowing, have pushed the revised 2025/26 budget to Shs78 trillion.

He cautioned that the government had already planned to borrow Shs32 trillion to finance the approved budget and was now returning to both domestic and external markets for additional loans, increasing pressure on public debt.

Questions have also been raised about the government’s ability to fully utilise loans once approved. Bugiri Municipality MP and JEEMA president Asuman Basalirwa noted that delays in signing binding loan agreements could jeopardise financing. He cited a USD 20 million loan from the Arab Bank for Economic Development in Africa, approved in September 2025, which has yet to be finalised despite additional government commitments.

Finance State Minister for General Duties Henry Musasizi defended the government’s approach, pointing to provisions in the Public Finance Management Act that allow supplementary spending beyond the 3% ceiling with parliamentary approval. He added that financing sources had been clearly disclosed, in line with Parliament’s Rules of Procedure.

However, the Auditor General has repeatedly warned that frequent supplementary budgets undermine planning and weaken fiscal discipline. In his 2023 report, he described the practice as increasingly wasteful, noting that many requests are submitted without sufficient consultation with programme managers.

By June 2025, Uganda’s public debt had climbed to Shs116.2 trillion (USD 32.3 billion), a 26.2% increase from the previous year. Domestic borrowing accounted for Shs60.3 trillion, while external debt stood at Shs55.9 trillion, pushing the debt-to-GDP ratio to 51.3%.

Economists caution that rising debt levels, combined with slow absorption of approved funds, are eroding fiscal space and increasing debt-servicing costs. Without tighter controls on borrowing and spending, they warn, Uganda risks constraining future development and undermining public confidence in the budget process.