Published on 22/05/2025
Uganda’s public debt soared to UGX 106.22 trillion by December 2024, sparking alarm in Parliament, prompting some Opposition MPs to call for a halt to the approval of the 2025/26 National Budget Estimates.
They warned that the country could face financial distress if borrowing is not brought under control.
The concerns arose during the 15th May 2025 plenary session following the presentation of the Minority Report on the 2025/26 National Budget Estimates by Kira Municipality MP, Ibrahim Ssemujju Nganda. He urged Parliament not to pass the budget until clear provisions are made to address Uganda’s pressing socio-economic challenges.
“Don’t approve the budget until it is structured to deal with the country’s socio-economic challenges,” Ssemujju said. “Funds allocated for workshops, entertainment, travel, and fuel should instead go to education, health, agriculture, and roads.”
Ssemujju cited a March 2025 report on Public Debt and Grants, which showed that Uganda’s total public debt had climbed to UGX106.22 trillion by December 2024. He pointed to a warning on page 9 of the report from the Ministry of Finance stating that the country faces a moderate risk of debt distress due to slow export growth and a rising debt service burden—estimated at 31.5% of revenue as of June 2024 and expected to remain above 20% over the medium term.
“Uganda has limited capacity to absorb economic shocks,” Ssemujju cautioned. “Any significant downturn could worsen the risk of debt distress.”
As Shadow Minister for Finance, Ssemujju also warned about Uganda’s growing dependence on Chinese loans, noting that China had become the country’s largest bilateral creditor. “As of December 2024, Uganda had paid China $178.74 million (UGX679.2 billion), of which UGX212.2 billion was interest and UGX13.2 billion in commissions and other fees. Uganda currently owes China UGX9.2 trillion—second only to the World Bank at UGX18.3 trillion. These Chinese loans are very expensive.”
He called on Parliament to discourage reckless borrowing from China and commercial banks.
Ssemujju also expressed concern over Uganda’s domestic debt, which stood at UGX53.22 trillion by December 2024, though the Treasury Operations Department reported UGX51.7 trillion. He criticized government borrowing from commercial banks to finance what he termed “luxurious lifestyles.”
“Sometimes government borrows money with a 91-day repayment period. That’s no different from individuals borrowing from moneylenders,” he said. “South African banks—especially Stanbic and Standard Chartered—are the biggest beneficiaries, collecting over UGX9 trillion annually in interest. With only four of the 24 licensed commercial banks being Ugandan-owned, what the government calls domestic borrowing is, in reality, external.”
These concerns were echoed in the Majority Report presented by Budget Committee Vice Chairperson Achia Remigio (Pian County), who cited an Auditor General’s report indicating that domestic arrears had risen from UGX10.5 trillion in FY2022/23 to UGX13.8 trillion in FY2023/24—an increase of 31.5%. New payables accrued in FY2023/24 totaled UGX6.64 trillion, while only UGX3.68 trillion was paid during the year. The rise in arrears was attributed to inadequate budgeting, cash flow constraints, and competing demands.
Remigio further clarified that the UGX13.8 trillion includes UGX8.31 trillion owed to the Bank of Uganda, with funds for its redemption included in the current 2024/25 budget. The remaining UGX5.25 trillion comprises arrears for goods and services, pensions and gratuities, international contributions, court awards, and utilities.
He noted that UGX1.4 trillion has been provided in the 2025/26 budget to reduce the arrears, down from UGX200 billion in 2024/25. “Government should strictly follow the Commitment Control System and sanction accounting officers who repeatedly commit expenditures without budgetary backing,” Remigio advised.
According to the Minority Report, the government has allocated UGX27.3 trillion—or 38% of the total budget—for debt servicing through the Treasury Operations Department. “It’s concerning that while we allocate UGX27.3 trillion for debt repayment, we’re seeking to borrow UGX32 trillion to fund other expenditures. That’s one step forward, two steps back,” Ssemujju warned. “We should at least be borrowing less than we’re repaying.”
The report also criticized the government for the underperformance of externally funded projects due to low loan absorption. “Unabsorbed loans attract commitment charges, raising the cost of debt and undermining project objectives,” Ssemujju said.
In FY2023/24, un-disbursed loans increased to UGX1.89 trillion—up 12.95% from UGX14.6 trillion in FY2022/23—resulting in UGX73.9 billion in commitment fees. Over the past five years, Uganda has paid UGX469.8 billion in such fees: UGX87.8 billion in 2018/19, UGX78.6 billion in 2019/20, UGX79.1 billion in 2020/21, UGX77.5 billion in 2021/22, UGX72.9 billion in 2022/23, and UGX73.9 billion in 2023/24.
Remigio also raised concern over the persistent delays in loan-funded project implementation, attributing them to late payments and slow land acquisition. “Commitment fees are a cost of inefficiency. Government must adopt strategies to enhance loan absorption and penalize non-performing implementers,” he urged.
Leader of the Opposition Joel Ssenyonyi echoed the concerns, particularly about domestic arrears. He criticized the Ministry of Finance for refusing to classify them as debt.
“If someone has done work for government and hasn’t been paid for 1–3 years, that’s a debt,” Ssenyonyi said. “Domestic arrears stood at UGX13.8 trillion by the end of FY2023/24. These are businesses that borrowed from banks based on government contracts and are now collapsing because they haven’t been paid.”
He rejected the Ministry’s defense that accounting officers are to blame for committing beyond available resources. “You can discipline accounting officers, but that should not be used as an excuse not to pay people who have delivered services,” Ssenyonyi argued.
In response, Minister of State for Finance Henry Musasizi said the government plans to clear the remaining arrears in three years. “Yes, the UGX13.8 trillion includes UGX8.3 trillion owed to the Bank of Uganda, which has been addressed.
After deducting the UGX1.4 trillion allocated in this year’s budget, the remaining UGX3.8 trillion will be cleared over the next three years,” Musasizi assured. He also mentioned an additional UGX600 billion under the Ministry of Works and Transport for settling outstanding contractor certificates.
