Uganda’s total public debt surged by 26.2% in the 2024/2025 financial year, reaching $32.3 billion, as the government increased its reliance on domestic borrowing to finance its needs, a new finance ministry report revealed on Friday.
The annual public debt report, which covers the period up to June, indicates that the debt pile grew from $25.6 billion in the previous financial year. The significant rise in indebtedness was primarily driven by a sharp increase in domestic borrowing, which grew by 52.7%, while external credit rose by a more modest 6.2%. This shift toward domestic financing has been highlighted by the report as a key factor in both the increase in nominal debt and the rising cost of debt service.
According to the ministry’s report, “the tilt toward borrowing from the local market has elevated debt service costs, as the domestic market demands higher yields”. The report noted.
However, this is a concern that has been previously raised by the central bank and other institutions, which have warned that the cost of repayments is consuming resources needed for critical sectors such as education and health.
As a percentage of the country’s Gross Domestic Product (GDP), the debt rose to 51.3% in the year to June, up from 46.9% in the previous period. The growing debt is largely attributed to the government’s continued investment in large-scale infrastructure projects in sectors like energy and transportation.
Uganda has a $61.3 billion GDP
The finance ministry’s report aims to provide transparency and accountability in the country’s debt management policies. The growing debt and the shift in its composition underscore the ongoing fiscal challenges facing the East African nation as it works to balance its development goals with financial sustainability.
