Uganda: Public Debt Accountability Questioned Amid Soaring Burden

• Uganda's public debt reached approximately Shs116.2 trillion (US$32.3 billion) by June 2025, representing 51.3% of GDP.
• The cost of debt repayment is escalating, with interest payments projected to consume 30.2% of domestic revenue by FY2026/27.
• Domestic debt, at Shs60.3 trillion, now slightly exceeds external debt, partly due to increased use of Treasury bonds and bills.
• Funds are being diverted from essential services like healthcare and education to cover debt obligations.
• Ensuring accountability, transparency, and prioritizing projects with measurable economic returns are crucial for Uganda's debt sustainability.

By firmly establishing accountability as the guiding principle, public debt can effectively remain a powerful instrument for national development, rather than a looming fiscal challenge.

Uganda's escalating public debt has transcended the realm of purely economic discourse, emerging as a critical national concern with far-reaching implications for every citizen. The Ministry of Finance, Planning and Economic Development reported that by June 2025, the nation's public debt reached approximately Shs116.2 trillion, equivalent to US$32.3 billion. This substantial figure represents 51.3 percent of Uganda's Gross Domestic Product (GDP), signaling a significant portion of the country's economic output is tied to its financial obligations.

This considerable Uganda national debt burden reflects a notable increase from the Shs94.7 trillion recorded just a year prior. The composition of this debt reveals a near-even split, with domestic debt standing at Shs60.3 trillion and external debt at Shs55.9 trillion. While these borrowings have historically facilitated crucial infrastructure development, including the construction of roads, dams, energy projects, and industrial parks, the rapid pace of accumulation prompts a fundamental inquiry into whether these funds are genuinely transforming the economy or merely deferring financial challenges to future generations.

A particularly alarming aspect of Uganda's financial landscape is the ever-increasing Uganda public debt repayment cost. As the overall public debt expands, the government is compelled to allocate progressively larger shares of its national revenue towards servicing these loans and covering interest payments. Data from the Ministry of Finance, Planning and Economic Development indicates that interest payments alone consumed 26.2 percent of domestic revenue during the 2024/25 financial year, with projections suggesting this proportion could climb to 30.2 percent by the 2026/27 fiscal year.

This growing reliance on domestic borrowing to meet budgetary requirements further exacerbates the cost of debt. The June 2025 debt bulletin highlighted that domestic debt, at Shs60.3 trillion, had slightly surpassed external debt, which stood at Shs55.9 trillion. The Uganda Ministry of Finance, Planning and Economic Development debt report attributed this shift, in part, to an increased utilization of Treasury bonds and bills to fulfill financing needs. Consequently, substantial financial resources that could otherwise be directed towards vital public services such as healthcare, education, agriculture, job creation initiatives, and social welfare programs are increasingly being absorbed by these pressing debt obligations. The tangible effects, though sometimes subtle, manifest as underfunded health centers, overcrowded educational facilities, or delays in government programs, all stemming from competing fiscal demands.

For borrowing to be economically justifiable, it must generate value that significantly outweighs its inherent cost. Investments such as roads that stimulate trade, power projects that attract industrial development, or irrigation schemes that boost agricultural productivity exemplify scenarios where loans can be prudent. However, when projects encounter delays, suffer from poor management, or ultimately fail to deliver their anticipated returns, the nation is left with a persistent Uganda national debt burden long after any promised benefits have vanished. This underscores the critical need for robust oversight and project execution.

The prevailing situation necessitates a shift from merely accumulating debt to demanding rigorous Uganda public debt accountability and ensuring optimal value for money. It is not about rejecting all forms of borrowing, which can be essential for development in resource-constrained environments, but rather about fostering a culture of responsibility. Citizens must become more engaged in scrutinizing how public resources are utilized, while parliamentary bodies and other oversight institutions hold a crucial role in guaranteeing transparency throughout every phase of the borrowing process.

To mitigate the risks associated with a rising Uganda debt to GDP ratio, the government must strategically prioritize projects that are capable of generating measurable economic returns. Simultaneously, strengthening domestic revenue collection is paramount to lessen the nation's dependence on external and internal loans. The Ministry of Finance, Planning and Economic Development has explicitly identified enhanced domestic revenue mobilization as a cornerstone of its comprehensive Uganda debt sustainability strategy. This proactive approach aims to ensure that the country's financial obligations remain manageable in the long term.

Ultimately, the objective is not to instill apprehension regarding debt, but to cultivate a profound sense of responsibility in its management. Uganda's true progress should be gauged not by the sheer volume of funds borrowed, but by the tangible and positive outcomes achieved through those borrowings. By firmly establishing accountability as the guiding principle, public debt can effectively remain a powerful instrument for national development, rather than a looming fiscal challenge.

Lawyers advising clients on public procurement, project financing, or infrastructure development in Uganda should anticipate increased scrutiny on project viability, transparency, and accountability measures due to the rising public debt. Compliance officers should monitor potential legislative changes or enforcement actions related to public finance management and project oversight, as the government seeks to ensure value for money and debt sustainability.

Source: Original reporting via African news outlet.