Parliament approves five-year plan to cut public debt

Parliament has approved a five-year fiscal framework that seeks to bring Uganda’s public debt down to 50 per cent of non-oil GDP by the end of Financial Year 2030/31, even as MPs questioned whether government can enforce the new targets after falling short of commitments under the previous framework.

The Charter for Fiscal Responsibility for FY2026/27–FY2030/31 sets limits on public debt, commercial borrowing, debt servicing and government expenditure, while also providing a framework for managing petroleum revenues.

Under the new framework, public debt is projected to rise to a peak of 55.1 per cent of non-oil GDP in FY2027/28 before declining to 50 per cent by FY2030/31.

The target will require government to reverse the recent rise in debt while reducing its reliance on borrowing to finance expenditure.

The Budget Committee, whose report was presented by its chairperson, Mr Amos Kankunda, recommended approval of the charter, saying it provides for revenue-led fiscal consolidation, reduced commercial borrowing, improved expenditure efficiency and more sustainable debt management.

The framework also targets a reduction in the share of domestic revenue spent on interest payments from 32.5 per cent in FY2026/27 to 20 per cent by FY2030/31.

The fiscal deficit, excluding petroleum revenue, is expected to fall from 6.6 per cent to no more than 1.5 per cent of non-oil GDP over the same period.

The committee recommended annual audits by the Auditor General to assess government’s compliance with the charter. It also proposed increasing domestic non-oil revenue by at least 0.5 percentage points of GDP every year.

Previous targets missed

However, the new commitments come against a mixed record under the outgoing fiscal framework.

The Budget Committee said public debt stood at 54 per cent of non-oil GDP as at June 30, 2026, above the previous target of below 50 per cent. Domestic interest payments accounted for 25.5 per cent of domestic revenue, against a target of 12.5 per cent, while the fiscal deficit stood at 6 per cent compared with a ceiling of 3 per cent.

The gap prompted some MPs to question whether the new targets would be any more enforceable than those in the previous charter.

Ms Joan Alobo, the FDC City Woman Representative for Soroti, questioned what would happen if government again failed to meet the 50 per cent debt target.

“What prevents the 50 per cent target from becoming another target ceiling that government missed?” she asked.

Katikamu County North MP Denes Sekabira similarly argued that government should first account for its performance under the previous charter before Parliament adopts another five-year framework.

Debt calculation dispute

The debate also exposed disagreements over how Uganda’s public debt is calculated.

Industrial Division MP Karim Masaba challenged the basis used to calculate the debt ratio, arguing that the nominal value of debt should be used.

“When you look at the IMF Public Sector Debt Statistics Guidelines, the way it is computed, we are supposed to use the nominal value, not the base value,” Mr Masaba said.

Nyendo-Mukungwe Division MP Gyaviira Lubowa, in a minority report, called for approval of the charter to be deferred. He cited concerns over GDP rebasing, debt computation, petroleum recoverable costs and the absence of a successor to the expired Domestic Revenue Mobilisation Strategy.

The concerns point to a broader question over how Uganda measures and manages its debt as it seeks to maintain fiscal discipline while financing infrastructure and other development priorities.

MPs back framework

Other MPs said the charter was necessary to provide a predictable framework for government borrowing and spending.

Napak District Woman Representative Faith Nakut said Parliament should approve the framework because it would guide the budgeting process for the next five years.

“The purpose for which we are processing this Charter for Fiscal Responsibility is to guide the budgeting for the next five years,” Ms Nakut said.

Kumi Municipality MP Silas Aogon described the charter as a commitment by government to Parliament and the public on borrowing, expenditure and debt.

“This charter is simply a government telling Parliament and the citizens of Uganda that this is how much we are going to borrow in the next five years. This is how we are going to spend it. This is how much we are going to owe in the next five years,” Mr Aogon said.

The Leader of the Opposition, Mr Joel Ssenyonyi, however, argued that government was not presenting a complete picture of its obligations.

Finance Minister Henry Musasizi urged MPs to approve the charter to allow government to proceed with the budgeting process and committed government to reducing its debt over the next three years.

Parliament subsequently approved the charter, subject to amendments recommended by the Budget Committee.