Uganda pushes for debt sustainability models that credit climate adaptation

State Minister for Finance Henry Musasizi has called on global lenders to reform how they evaluate national debt by factoring in climate resilience.

Speaking at the International Monetary Fund and World Bank Spring Meetings in Washington, D.C., Musasizi argued that current financial frameworks often penalize developing nations for borrowing to fund climate adaptation projects. He noted that while climate risks are frequently used to lower credit ratings, the long-term economic benefits of investing in infrastructure like flood protection or drought-resistant farming are often ignored.

Uganda, which co-chairs the Coalition of Finance Ministers for Climate Action, is already incorporating climate-related costs and benefits into its sovereign debt analysis. Musasizi explained that this data-driven approach proves that resilience spending actually protects future growth and stabilizes debt trajectories.

The minister pointed to Uganda’s 2016-17 fiscal year as a cautionary tale. During that period, a severe drought slashed economic growth by 1.5 percentage points, impacting over 1 million citizens and forcing the government into unplanned expenditures. To prevent such shocks, Uganda needs to secure $12.3 billion in external funding over the next five years.

However, Musasizi warned that access to affordable capital is becoming increasingly difficult as traditional aid pools shrink and commercial interest rates remain prohibitively high. He stressed that international assessments must recognize these climate investments as high-return assets rather than mere costs.

Despite these hurdles, the government maintains its ambitious Vision 2040 goal to expand the national economy to $500 billion.

In a separate session during the summit, Attorney General Kiryowa Kiwanuka addressed the World Bank Accountability Task Force. Kiwanuka emphasized that new oversight mechanisms must respect the sovereignty of borrower nations and ensure that project managers are consulted during investigations to maintain a fair balance between public and private interests.