Civil society and opposition leaders have raised alarm over Uganda’s escalating public debt, warning that the growing loan burden is being shouldered by local citizens at the expense of essential services.
On Thursday, the Executive Director of the Civil Society Budget Advocacy Group (CSBAG), Julius Mukunda, criticized Parliament’s recent approval of a Shs9.1 trillion loan, saying continuous borrowing is affecting ordinary Ugandans whose taxes are used to pay off debt interest.
‘The government will never fail to pay back the loan and interest, but at whose cost? It is the local Ugandans whose services are forgone for the loan to be paid who are suffering and paying the heavy prices. Shs30 on every Shs100 collected in taxes is channeled to repaying debt interest, which is far higher than the Shs12.5 that was estimated, and this is worrying as the government continues to borrow,’ Mukunda said during CSBAG’s end-of-year press conference in Kampala.
He added that debt servicing now consumes 31.5 percent of domestic revenue, with interest payments growing faster than allocations to health, education, and agriculture.
‘Debt has therefore become not only a macroeconomic concern, but a direct threat to delivery service,’ he warned.
According to the Ministry of Finance, Uganda’s public debt stock reached Shs116.2 trillion ($32.3 billion) as of June 2025, with Shs55.9 trillion externally borrowed and Shs60.3 trillion internally. The debt-to-GDP ratio now stands at 51.3 percent.
Parliament last week approved four loans worth Shs9.6 trillion, including Shs576.8 billion from Korea Export Import Bank for Makerere University science facilities, Shs1.6 trillion from Rand Merchant Bank for infrastructure, and Shs7.1 trillion from Vitol Ballrain E.C. for the Uganda National Oil Company’s projects.
Opposition leader Joel Ssenyonyi warned that the country is ‘entering the red zone’ on debt sustainability.
‘We are no longer borrowing from a point of strength and comfort. we continuously have to live on debt. We have got to be careful how we operate,’ he said.
Mukunda also criticized the government’s reliance on expensive domestic borrowing, which attracts interest rates of 15-17 percent, compared with 2-3 percent for concessional external loans.
‘Interest payments rose to Shs7 trillion in FY2025, up from Shs3 trillion in 2019. For every Shs100 collected in taxes, Shs25 is spent on interest alone. High interest costs limit the funds available for essential services such as health and education,’ he noted.
Uganda’s original budget for FY2025/26 was Shs72.3 trillion, with domestic revenue projected at Shs37.55 trillion.
A recent Shs8.1 trillion supplementary budget raised the total to Shs80 trillion, allocated to development, recurrent, and statutory expenditures across multiple government ministries.
The country’s tax-to-GDP ratio remains at 14 percent, below the Sub-Saharan African average of 18 percent, leaving the government dependent on borrowing and external financing, according to development experts.
Mukunda cautioned that oil revenue, expected to begin in late 2026, may be absorbed by debt repayment if borrowing trends continue.
S and P Global Ratings projects oil production could peak at 230,000 barrels per day by 2030, contributing 1-2 percent of GDP annually.
He urged the government to prioritize service delivery and national content policies, warning that inadequate management could undermine the intended benefits of the oil and gas sector.
‘Most of our people die due to inadequate emergency medical care services in our hospitals, and this is simply not because government doesn’t have enough resources but where these resources are prioritised,’ Mukunda said, highlighting the human cost of debt mismanagement.