Uganda’s public debt rose by 26.2% in the 2024/2025 financial year, increasing from $25.6 billion to $32.3 billion. Domestic borrowing surged by 52.7% as the government financed major infrastructure projects. Meanwhile, external borrowing grew by 6.2%.
Higher domestic borrowing pushed up debt service costs because local market yields rose. Consequently, Uganda’s debt-to-GDP ratio climbed to 51.3% from 46.9% the previous year. The central bank and other stakeholders expressed concerns that rising debt service costs could strain funding for essential sectors like education and health.
The government emphasized that these borrowings are vital for economic growth, particularly through infrastructure investments. Still, the growing debt caused a credit rating downgrade, signaling the need for careful fiscal management.
Looking ahead, the government projects 7% economic growth for the 2025/26 fiscal year. Growth could accelerate to double digits once oil and gas production begins. However, fiscal pressures and external shocks remain potential risks that must be managed carefully.
