Published on 27/12/2024
Ministry of Finance has revealed that Uganda has accumulated over UGX 43 trillion in borrowed funds over the past 11 years, with UGX 16.4 trillion remaining undisbursed.
This revelation is outlined in the 2025/26 National Budget Framework Paper, which also highlights concerns over the UGX 12.72 trillion earmarked for debt servicing, to be drawn from the UGX 31.98 trillion projected tax revenue for the 2024/25 financial year.
Documents presented to Parliament indicate that between 2013 and 2024, the government borrowed USD 11.85 billion (UGX 43.25 trillion). Of this amount, USD 7.35 billion (UGX 26.84 trillion) has been disbursed, leaving USD 4.49 billion (UGX 16.4 trillion) unutilized.
Sectoral Breakdown of Undisbursed Loans
- Integrated Transport Infrastructure & Services:
- Total borrowed: USD 3.47 billion (UGX 12.66 trillion).
- Disbursed: USD 2.14 billion (UGX 7.83 trillion).
- Undisbursed: USD 1.32 billion (UGX 4.83 trillion).
- Energy Development:
- Total borrowed: USD 3.27 billion (UGX 11.94 trillion).
- Disbursed: USD 2.39 billion (UGX 8.72 trillion).
- Undisbursed: USD 883 million (UGX 3.22 trillion).
- Natural Resources, Environment, Climate Change & Water:
- Total borrowed: USD 1.36 billion (UGX 4.98 trillion).
- Disbursed: USD 525 million (UGX 1.91 trillion).
- Undisbursed: USD 840 million (UGX 3.07 trillion).
Government’s Defence of Borrowing
Despite the large volume of idle loans, the government has defended its borrowing, citing major infrastructure achievements. These include:
- Doubling the paved national road network from 15% (3,121 km) in 2012/13 to 29% (6,133 km) in 2022/23.
- Construction of Kabalega International Airport and expansion of Entebbe International Airport.
- Rehabilitation of the Meter Gauge Railway (Malaba-Kampala and Tororo-Gulu).
- Increasing electricity generation capacity from 595 MW in 2010/11 to over 2,000 MW in 2023/24.
- Growing the number of industrial power consumers from 539 in 2013 to 4,065 in 2023.
- Expanding the piped water network to 22,668 km in 2022/23 from 14,466 km in 2017/18.
The Ministry also highlighted improvements in internet penetration, classroom construction, and national backbone infrastructure.
Debt Servicing Burden
The Ministry acknowledged the strain public debt places on Uganda’s finances, with one-third of domestic revenue directed toward debt servicing. In FY 2023/24, UGX 8.76 trillion was spent on debt servicing, a figure projected to rise to UGX 12.72 trillion in FY 2024/25.
“Although public debt remains sustainable, the rising debt service cost underscores the need for increased domestic revenue mobilization, targeted public expenditure, and prudent debt management,” the Ministry stated.
Public Debt Status
As of June 30, 2024, Uganda’s total public debt stood at USD 25.6 billion (UGX 94.9 trillion), with external debt accounting for 57.2% and domestic debt for 42.8%. The Ministry attributed the increase in debt to strategic infrastructure investments in areas such as roads, water, health, industrial parks, and national security projects.
Budget Projections
The projected resource envelope for FY 2025/26 is UGX 57.44 trillion, a reduction of UGX 14.69 trillion from UGX 72.13 trillion in FY 2024/25. This budget will be financed through a mix of domestic and external resources.
