Undisbursed external debt rose sharply during the first quarter of 2026, reaching $5.39b (Shs20.3 trillion) by the end of March, according to Ministry of Finance.
This was a rise of more than 44 percent from $3.74b (Shs14.1 trillion) recorded at the end of December 2025.
Undisbursed debt refers to loans that have been approved and signed but whose funds have not yet been used.
Although these loans are intended to finance development projects, delays in using them create challenges, requiring government pay commitment fees on unused funds.
Data from the Ministry of Finance indicates that the increase was mainly caused by several new loan agreements signed during the quarter.
Among the projects contributing to the rise were Enhancing Agricultural Productivity and Market Access Project, Karuma-Tororo Transmission Line Project, Water Supply and Sanitation Project, Laropi-Moyo-Katuna Road Project, and Development Response to Displacement Impacts Project II.
Undisbursed debt increased across all categories of lenders. Commitments from private creditors rose from $140m to $960m (Shs3.6 trillion), while loans from multilateral institutions increased from $2.99b to $3.58b (Shs13.5 trillion), while those from bilateral lenders rose from $610m to $850m (about Shs3.2 trillion).
During the period, the Ministry of Finance indicates that total public debt rose slightly from $34.86b to $34.98b (Shs131.6 trillion) due to new borrowing, continued loan disbursements, and changes in currency values.
Domestic debt remained the largest share of the debt portfolio, increasing to $19.1b (Shs71.9 trillion), while external debt rose slightly to $15.88b (Shs59.7 trillion).
Multilateral lenders still key
Multilateral institutions such as the World Bank, IMF, and African Development Bank remain Uganda’s largest lenders. By March 2026, multilateral creditors accounted for $10.4b (Shs39.1 trillion), representing 65.5 percent of Uganda’s external debt.
Among bilateral lenders, China’s Export-Import Bank remained the largest creditor with outstanding loans of $2.08b (Shs7.8 trillion).
Within the private sector, Stanbic Bank had the largest exposure at $820 million (Shs3.1 trillion).
Concessional loans
Government continues to rely mainly on concessional loans, which carry lower interest rates and longer repayment periods. Concessional debt accounted for $8.83b (Shs33.2 trillion), representing 55.6 percent of the external debt portfolio.
The increase was largely supported by additional funding from development partners, including the World Bank, African Development Fund, and Islamic Development Bank.
Debt servicing costs
Despite the increase in debt, debt servicing obligations eased during the quarter, with external debt service repayments falling from $416m (Shs1.56 trillion) to $288.3m (Shs1.08 trillion).
The weighted average interest rate on public debt also declined from 9.5 percent to 9 percent. Domestic debt remained much more expensive, carrying an average interest rate of 14.6 percent compared to 2.3 percent for external debt.
Risks remain manageable
Government says Uganda’s debt risks remain largely manageable, with more than 90 percent of public debt carrying fixed interest rates, reducing exposure to sudden increases in borrowing costs.
However, the sharp rise in undisbursed debt has raised concerns about delays in implementing government projects.
Analysts warn that if project execution does not improve, Uganda could continue accumulating debt without fully benefiting from the investments the loans are intended to finance.
Permanent Secretary and Secretary to the Treasury Ramathan Ggoobi said the publication of the debt bulletin supports government efforts to improve debt transparency and strengthen public financial management.
While debt indicators remain relatively stable, experts say faster implementation of development projects will be critical to ensuring borrowed funds generate economic growth and deliver benefits to Ugandans.