KAMPALA, July 16 – Uganda expects its fiscal deficit to fall to 3% of GDP by the 2030/31 financial year from 6% this financial year as the government shifts towards cheaper external borrowing, according to the central bank.
The central bank said the country’s new debt strategy is expected to reduce reliance on expensive domestic borrowing and help lower rising interest payments over the coming years.
The report also assessed Uganda’s public debt outlook as carrying a moderate level of risk. However, it warned that higher debt servicing costs and the country’s limited ability to absorb economic shocks remain key challenges.
According to the finance ministry, Uganda’s total public debt rose by 8% to $34.9 billion in the second half of last year. The increase was mainly driven by higher domestic borrowing. Meanwhile, the central bank said the economy continued to strengthen. Uganda’s GDP grew by 8.5% in the second quarter of the 2025/26 financial year, compared with 5.3% in the same period a year earlier.
The stronger growth was supported by increased investment linked to the country’s oil sector, as well as solid export performance and higher agricultural production.
Earlier in March, the finance ministry released a new debt management strategy outlining plans to increase external borrowing while reducing the use of costlier domestic loans as part of efforts to improve the country’s fiscal position.
