The growing public debt burden in Uganda is increasingly straining government finances and raising concerns about fiscal discipline, according to researcher and policy analyst Hilda Tumuhe.
Speaking to Hakiim Wampamba during Next Big Talk hosted by Next Radio on Thursday, Tumuhe said that while some borrowing has supported development priorities, a portion of the country’s rising debt stems from policy missteps and weak planning.
“Over the years, we have seen an increase in our debt; partly for the right reasons, but also due to careless mistakes by the government and other stakeholders involved,” she said.
According to figures from the Ministry of Finance, Planning and Economic Development, Uganda’s total public debt stood at approximately Shs 126 trillion as of December 2025, highlighting the scale of the country’s financial obligations.
Tumuhe observed a notable shift in borrowing patterns, with Uganda increasingly turning to private creditors rather than traditional multilateral lenders. She explained that this trend may reflect declining confidence among international financial institutions.
“In some cases, multilateral lenders may be reluctant to extend credit to Uganda due to concerns around fiscal indiscipline, poor planning, and other structural challenges,” she said.
Tumuhe emphasized that debt servicing now takes precedence in government spending, consuming a growing share of national revenues and limiting fiscal space for essential public services and development programs.
“Debt is an obligation of our government, and debt servicing takes priority in government expenditure. We are increasingly seeing debt repayments consume a significant portion of our revenues,” she said.
Tumuhe also pointed to rising borrowing costs within the domestic financial market, noting that high interest rates are placing additional pressure on businesses and individuals.
According to the latest Private Sector Development Report, lending rates in Uganda average around 18.4 percent—significantly higher than those in many regional economies.
“Interest rates at commercial banks have been rising sharply. Borrowing rates in Uganda are high compared to regional peers,” she said.
Tumuhe further questioned the sustainability of domestic borrowing, cautioning that excessive government demand for credit could potentially crowd out private sector investment.
“Borrowing from the domestic market—but to what extent are we borrowing to ensure we do not hurt the private sector?” she asked.
