Uganda reports 50.9% debt-to-GDP ratio amid rising domestic borrowing

KAMPALA, Uganda — Uganda’s public debt surged to $32.24 billion during the 2024-25 fiscal year, driven by increased domestic borrowing and heavy investment in the country’s emerging oil and gas sector.

The latest Debt Sustainability Analysis Report from the Ministry of Finance, Planning and Economic Development shows a significant climb from the previous year’s total of $25.59 billion. While government analysts classified the debt as sustainable, they warned of a moderate risk of debt distress.

The rise was fueled largely by domestic debt, which jumped to $16.79 billion from $10.96 billion. This growth includes a 7.78 trillion shilling payment for Bank of Uganda advances and preparations for the nation’s first oil production, expected in the 2026-27 fiscal year.

Uganda’s debt-to-GDP ratio reached 50.9% in June 2025, up from 46.6% the previous year.

The report highlights a growing strain on the national budget. Debt servicing costs consumed 35.7% of domestic revenues as of June 2025. Economists project this figure will peak at 45.3% by June 2026, citing high domestic interest rates and rising global financing costs.

Domestic interest payments alone accounted for 22% of domestic revenue in the last fiscal year. To mitigate these pressures, the government outlined a strategy to:

• Prioritize concessional external financing with lower interest rates and longer maturities.
• Moderate domestic borrowing to reduce the debt service burden.
• Implement a domestic revenue mobilization strategy to increase tax collections.

Economic outlook and oil prospects

The debt-to-GDP ratio is expected to peak at 55.5% by June 2026 before beginning a gradual decline. This long-term outlook depends heavily on the realization of oil-related revenues and continued fiscal consolidation.

Ramathan Ggoobi, the permanent secretary and secretary to the treasury, stated in the report that while the debt remains manageable, the economy is vulnerable to external shocks, such as lower-than-projected export growth.

The Ministry of Finance indicates the nominal debt-to-GDP ratio should fall back below the 50% threshold by the 2030-31 fiscal year.