Uganda Debt Burden Puts Pressure on Development as Experts Question Use of Borrowed Funds

What the report says

Uganda’s public debt has climbed to Shs136.06 trillion, according to the Ministry of Finance’s latest debt bulletin, intensifying concerns about how much of the national budget is being used to service borrowing rather than fund development. Nile Post reported that debt servicing is set to absorb about Shs33.4 trillion in the 2026/27 budget, close to 40 percent of the Shs84.3 trillion spending plan, with interest payments alone projected at roughly Shs12.4 trillion.

The report said the country’s debt stock was equal to 54.3 percent of GDP at the end of June 2026, with domestic borrowing at Shs76.32 trillion and external debt at Shs59.74 trillion. Economists and policy experts quoted by the publication said the main concern is not only the size of the debt, but whether borrowed money is carefully planned, well managed and directed to projects that produce lasting value. Herbert Kafeero of SEATINI Uganda argued that weak public investment management is a major problem.

Nile Post also noted wider worries about corruption, misuse of public funds and low absorption of concessional loans. The Finance Ministry has said concessional financing had an absorption rate of 45.5 percent by December 2025, leaving about $5.51 billion undisbursed. Analysts say such inefficiencies, together with debt repayments, reduce fiscal space for sectors such as health, education, infrastructure and job creation.

The article adds that Uganda’s tax collections have grown in recent years, while oil revenues are expected to become another future source of income. Even so, the central message from the experts is that government must improve project planning, spending discipline and domestic revenue mobilization so that borrowing supports, rather than crowds out, development.