As Finance Minister Matia Kasaija presented Uganda’s national budget for the 2025/26 financial year, alarm bells rang in Parliament over the country’s deepening debt crisis.
Shadow Finance Minister and Kira Municipality MP, Ibrahim Ssemujju Nganda, raised urgent concerns about Uganda’s growing borrowing appetite and dwindling ability to repay.
“Who will lend us Shs 34 trillion?” Ssemujju asked, referencing the government’s plan to borrow an estimated Shs 34 trillion to finance the new budget. According to the Medium-Term Debt Management Strategy, 68% of this borrowing will be sourced from domestic commercial banks, while only 32% is expected from multilateral lenders such as the World Bank and IMF.
Worryingly, only 9% of these loans are concessional, with over 16% classified as expensive commercial credit.
Some of the new loans will reportedly fund recurrent expenditure—contradicting previous government commitments to borrow primarily for development projects.
Uganda’s public debt now stands at Shs106.2 trillion, equivalent to 52.4% of GDP. Of the Shs72 trillion budget for 2025/26, a staggering Shs27.3 trillion (38%) is earmarked for debt servicing.
This includes Shs10 trillion for interest payments and another Shs10 trillion for redeeming domestic securities.
“We are now borrowing more to pay back existing loans—a dangerous fiscal spiral,” Ssemujju warned.
Despite these debt pressures, the Uganda Revenue Authority (URA) has been tasked with collecting Shs 34 trillion in domestic revenue, up from Shs29.2 trillion last year.
However, URA has failed to meet its revenue targets for five consecutive years, raising questions about the realism of this year’s goal.
The targeted revenue includes Shs 12.9 trillion from direct domestic taxes, Shs12.6 trillion from international trade, and Shs8.7 trillion from indirect domestic sources.
Yet, with persistent shortfalls, high interest obligations, a depreciating shilling, and declining foreign exchange reserves, Uganda’s fiscal health remains precarious.
China is now Uganda’s second-largest creditor after the World Bank, with Shs 9.2 trillion owed to Beijing. Last year alone, Uganda paid Shs679 billion in interest and fees to China.
Meanwhile, domestic debt—much of it borrowed from foreign-owned banks like Stanbic and Standard Chartered—now exceeds Shs53 trillion.
Ssemujju cautioned that Uganda is borrowing more for consumption than production, warning that the private sector is increasingly being crowded out.
With general elections looming, there are growing fears that fiscal indiscipline may worsen.
“This budget reflects misplaced priorities. We are enslaving future generations without creating meaningful economic value,” Ssemujju said.