Over the past six years, the government’s unbridled appetite to borrow has hit a notch higher, currently placing liability of over Shs2.5m on each Ugandan, including newborns.
About the same time last year, with pretty much the same population of nearly 46 million Ugandans, according to the Uganda Bureau of Statistics, every Ugandan carried a debt burden of Shs2.3m.
This liability has since increased by nearly Shs280,000, which is more than the wages earned monthly by half of the working labour force in the country, according to a survey conducted by the Economic Policy Research Centre (EPRC). The average salary of 50 percent of the labour force in the country is about Shs200,000.
Paying this debt off would take about 10 years if each Ugandan citizen makes a prompt annual payment of Shs280,000 each without fail over the next decade.
‘Uganda’s total public debt, currently at Shs116 trillion, presents a significant per capita burden, approximately Shs2.58m per citizen,’ Ms Peninah Naiga, a public debt researcher, told Business Outlook.
She added: ‘The growing public debt portfolio raises concerns about [the] government’s ability to sustain these payments without putting a strain on available resources for funding Budget activities to achieve the desired economic and service delivery plans in the National Development Plans.’
The Office of the Auditor General, in its report to Parliament in the Financial Year (FY) ended June 2023, indicated that the public debt increased by 104 percent in five years from FY2018/2019 to FY2022/2023.
This debt liability owed to multilateral institutions, creditors, financiers, suppliers and banks must be paid by mostly the youth, who collectively currently bear a debt burden of Shs56.3 trillion, going by the Uganda Debt Network (UDN) expert analysis on public debt and its management.
The issue, Mr Julius Mukunda, the executive director of Civil Society Budget Advocacy Group (CSBAG), says is not about whether to borrow or not. It is about making every coin count, something that hasn’t been apparent over the years.
A section of the population believes the government is going about borrowing business in a manner that could mortgage the country’s future or simply compromise the country’s long-term economic stability. This fear has been corroborated by a team of public debt experts and policy analysts, who revealed that the country’s public debt has grown at an alarming rate, raising critical concerns about the country’s fiscal/financial health and long-term economic resilience.
In freefall
Our investigation indicates that public debt surged from approximately Shs45 trillion ($12.82b) in FY2018/2019 to an estimated Shs113 trillion ($32.3b) in FY2024/2025.
A major catalyst for this debt accumulation has been the Covid-19 pandemic and the resultant measures undertaken by the government, including shutting down the economy for a substantial part of the two-year lockdown, straining public finances while increasing reliance on external support.
Further exacerbating the situation are geopolitical tensions particularly the Russia-Ukraine conflict and the suspension of concessional aid from key development partners such as the World Bank and the US government.
Experts say mismanagement by way of not utilising the loans properly after acquiring them-moreover at unfavourable terms-emerged have not helped matters.
As a result, Uganda’s debt-to-GDP ratio, which is a measure of the country’s debt burden, has increased from 49 percent in FY2023/2024 to an estimated 52 percent in FY2024/2025, surpassing the 50 percent ceiling the IMF recommends for low-income countries.
It has also breached the Charter for Fiscal Responsibility (CFR), a document outlining the government’s commitment to properly manage public debt within the 50 percent threshold.
On account of the growing risks, which include fear that Uganda might not meet her public debt obligations, Moody’s downgraded Uganda’s credit rating from B2 to B3. Observers say this also signals the economy’s heightened vulnerability to external shocks and the tightening of global financing conditions.
As borrowing terms become more restrictive and expensive, Uganda faces rising debt servicing costs, which strain the National Budget and limits the government’s use of taxation and spending to influence the economy-fiscal policy flexibility.
Addressing these challenges requires prudent debt management and policy realignment, experts say, to safeguard economic growth, something the deputy Secretary to the Treasury at the Finance ministry, Mr Patrick Ocailap, acknowledges.
‘What makes you think we are not already ahead of that curve – we think ahead.’
The burden
Of the Shs72 trillion in the FY2024/2025 National Budget, more than 57 percent is allocated to debt servicing, a significant burden on the shoulders of the taxpayer.
External debt repayments alone amounted to Shs4.1 trillion ($1.17b), with interest payments and related fees comprising 31 percent of this total. Overall, Uganda spent Shs21 trillion ($5.99b) on debt servicing, equivalent to approximately 67 percent of total revenue collected.
This level of expenditure, Ms Naiga says, severely limits the government’s capacity to invest in critical sectors such as health, education, and infrastructure. This is because it diverts resources away from public services and development programmes, undermining social progress and economic transformation.
Furthermore, she said: ‘External repayments place pressure on foreign reserves, reducing Uganda’s ability to respond to external shocks and increasing vulnerability to global economic fluctuations.
The Business Outlook investigation also uncovered the country’s increasing reliance on non-concessional loans or simply funds borrowed with unfavourable terms. Coupled with a rise in public administration expenditures, this has further exacerbated the debt situation.
As of June 2025, domestic debt comprised approximately 52 percent of the total public debt portfolio, indicating a marked shift toward internal borrowing.
A value for money audit on the management of public debt by the Finance ministry reveals that public debt management in Uganda still remains a public concern.
The report of the Auditor General that became public in late December 2024, noted that in spite of an earlier audit undertaken on Management of Public Debt by the Finance ministry in 2015, the problems identified and recommendations made to address key concerns as high cost of domestic borrowing, inadequate technical and economic assessments of new loan uptake the challenges around public debt management still remain.
The report also discloses that several loans have been poorly utilised due to delays in project readiness and execution.
For instance, 15 projects were approved without prior feasibility studies, while others faced decade-long delays caused by unresolved land acquisition issues, lack of counterpart funding, and weak inter-agency coordination.
Although, according to UDN analysis, government-guaranteed debt exposure decreased from $59.8m (Shs210b) in 2024 to $44.61m (Shs156.5b) in 2025, overall risk remains elevated due to weak oversight and the underperformance of debt-funded projects.
To mitigate these risks, the UDN expert analysis shared with Business Outlook recommends that authorities strengthen State-Owned Enterprises governance frameworks, improve transparency, and enforce robust monitoring and reporting systems.
Our investigation also found out that Uganda’s current debt trajectory is increasingly misaligned with global and regional development frameworks.
This was also corroborated by UDN expert analysis of the debt structure, revealing that the poor performance of debt-funded projects hinders progress toward the Sustainable Development Goals (SDGs), especially those related to employment, infrastructure, and innovation.
‘Public debt is sustainable’
Uganda’s debt, however, Finance minister Matia Kasaija says, is sustainable and is projected to remain so in the medium to long term. He said over the last 10 years, the areas which public debt has financed include integrated transport infrastructure and development of industrial parks.
To maintain public debt sustainability, he said the government is looking to increase revenue collection and reduce borrowing.
And where borrowing is necessary, it will be through concessional financing from international financial institutions such as the World Bank, IMF, African Development Bank, Islamic Development Bank, the Arab Bank for Economic Development in Africa (BADEA), among others. The World Bank cleared Uganda this past workweek to partake of its concessional loans.