Kampala – Uganda’s public debt has climbed to UGX130.9 trillion, driven largely by increased domestic borrowing, according to the latest figures released by the Ministry of Finance, Planning and Economic Development.
Data contained in the Quarterly Debt Statistical Bulletin for December 2025 shows that the total debt stock rose from US$34.21 billion (UGX128.6 trillion) in September 2025 to US$34.86 billion (about UGX130.9 trillion) by the end of December.
“The total public debt stock increased to US$34.86 billion by the end of December 2025… This quarterly increase stemmed mainly from increased domestic debt issuances,” the report states.
Domestic debt dominates
The report indicates that domestic borrowing now accounts for the largest share of Uganda’s debt, standing at 54.5% (US$19.02 billion or UGX68.86 trillion), compared to external debt at 45.3% (US$15.84 billion or UGX57.33 trillion).
Despite the rise in overall debt, the government recorded a decline in domestic debt servicing costs, which fell from UGX3.913 trillion in September to UGX2.997 trillion in December 2025.
Ggoobi defends borrowing strategy
Appearing before Parliament’s Public Accounts Committee on March 11, Secretary to the Treasury Ramathan Ggoobi defended the government’s reliance on domestic borrowing, rejecting claims that it crowds out private sector credit.
“We need to rethink some of these models because in Uganda, government is borrowing on behalf of the private sector,” Ggoobi said.
He pointed to programmes such as the Parish Development Model, arguing that government borrows at commercial rates and lends to citizens at subsidised or zero interest.
“There is no way a PDM beneficiary would have been welcomed in a bank… So we are not crowding out the private sector; we are crowding it in,” he added.
MPs raise concerns
However, legislators expressed concern that heavy domestic borrowing could limit access to credit for businesses.
Elgon County MP Ignatius Mudimi noted that although lending rates have eased, government borrowing through treasury instruments still competes with the private sector.
“Financial institutions prefer lending to government because of the lower risk. If we are competing in the same market, what are we doing to support the private sector?” Mudimi asked.
PAC Vice Chairperson Gorreth Namugga warned that many Ugandans remain excluded from affordable financing.
“The biggest percentage of Ugandans are still left out… By leaving them to face high commercial interest rates, we are not helping communities,” she said.
Economists warn of risks
Economists and civil society groups have also raised red flags over the pace of domestic borrowing.
Jane Nalunga, Executive Director of SEATINI-Uganda, said the ratio of domestic debt to private sector credit has risen sharply beyond recommended thresholds.
Meanwhile, Julius Mukunda of the Civil Society Budget Advocacy Group cautioned that government borrowing must translate into real access to finance for citizens.
“If government borrows from commercial banks but cannot reach the intended beneficiaries, then the impact is lost,” Mukunda said.
Borrowing to continue
Government is expected to maintain its reliance on domestic financing. The Ministry of Finance plans to borrow UGX8.95 trillion locally to fund the 2026/27 budget, slightly lower than the UGX11.38 trillion borrowed in the current financial year.
At the same time, domestic debt repayments are projected at UGX9.678 trillion in 2026/27, underscoring the growing burden of servicing Uganda’s rising debt.
