Uganda adds Shs21 trillion to public debt in 1 year

• Uganda’s public debt rose from Shs105.17 trillion in December 2024 to Shs126.16 trillion in December 2025.

• Domestic debt stood at $19.02 billion, compared with external debt of $15.84 billion.

• Public debt reached 50.90 per cent of GDP in June 2025.

• Domestic arrears stood at Shs8.68 trillion, while contingent liabilities reached Shs20.57 trillion.

Uganda’s public debt rose by nearly 20 per cent to Shs126.16 trillion in the year to December 2025, driven by increased domestic borrowing and spending on infrastructure projects.

The debt stock increased from $29.06 billion (Shs105.17 trillion) in December 2024 to $34.86 billion (Shs126.16 trillion) in December 2025.

Despite the Shs21 trillion increase, Finance State Minister Henry Musasizi told Parliament that the debt remains sustainable over the medium to long term.

Musasizi made the remarks while appearing before Parliament’s Committee on the National Economy alongside officials from the Ministry of Finance, Planning and Economic Development.

Of the $34.86 billion debt stock, $15.84 billion was external debt while $19.02 billion was domestic debt.

Musasizi attributed much of the increase to domestic borrowing to finance the fiscal deficit. He also cited continued investment in strategic infrastructure projects meant to support economic growth.

Uganda’s nominal public debt as a share of gross domestic product also increased. It rose from 46.86 per cent in June 2024 to 50.90 per cent in June 2025.

Musasizi said the size of the debt alone does not determine its sustainability. He said the government also considers the economy’s capacity to repay its obligations.

He cited efforts to raise more domestic revenue, cut unnecessary expenditure and improve spending efficiency as measures to keep the debt manageable.

The government also expects future oil revenues and its Ten-Fold Growth Strategy to strengthen the economy.

Musasizi, however, acknowledged that the growing debt stock poses risks, especially as debt servicing costs rise.

He said the government will prioritise concessional and cheaper financing while directing borrowed money towards investments capable of generating returns.

The government also had $18.23 billion in commitments for externally financed projects and programmes by December 2025.

Of this amount, $8.59 billion had been disbursed, representing 47.16 per cent.

Musasizi said the government is working with implementing agencies and development partners to speed up project implementation and disbursement.

Contingent liabilities also increased from Shs18.96 trillion in June 2024 to Shs20.57 trillion in June 2025. This represented an increase of Shs1.61 trillion, or 8.5 per cent.

The ministry attributed much of the increase to legal cases against the central government. These include land compensation disputes, contractual claims from infrastructure projects and other statutory obligations.

Domestic arrears remain another challenge.

The audited stock for the 2024/25 financial year stood at Shs8.68 trillion. Central government accounted for Shs8.54 trillion, or 98.45 per cent, while local governments owed Shs134.83 billion.

Musasizi said the government is tightening expenditure controls to prevent new arrears while clearing verified obligations.

He said the government remains committed to responsible borrowing, prudent debt management and ensuring borrowed money delivers value for taxpayers.