KAMPALA, Dec 18 – Uganda plans to reduce its domestic debt issuance by 21.1% in the 2026/27 financial year as part of efforts to rein in public debt and ease pressure on government finances, according to a finance ministry budget paper.
The government will issue 9 trillion Ugandan shillings, or about $2.53 billion, in Treasury bills and bonds in the financial year starting in July, down from 11.4 trillion shillings in the previous period.
The finance ministry said the reduction reflects the government’s intention to avoid crowding out private sector borrowing, curb the rising debt to GDP ratio, and address the growing burden of interest payments relative to revenues.
Interest payments on Uganda’s public debt are projected to consume nearly one third of all domestic revenues in the 2026/27 fiscal year. Public debt rose to 51% of gross domestic product in the year to June, up from 46.8% in the prior period.
“Such elevated debt service burdens shrink fiscal space, leaving fewer resources available for discretionary spending in high multiplier, growth enhancing sectors,” the ministry said.
Uganda’s total public debt stood at $32.3 billion as of June, representing a 26.2% increase from the same period a year earlier.
Despite the tightening of domestic borrowing, the government projects a strong economic rebound. Growth is forecast to accelerate to 10.4% in the 2026/27 fiscal year from 6.6% previously.
“This robust growth outlook will be primarily driven by the commencement of oil production, which is expected to generate substantial revenue and stimulate productivity through strong intersectoral linkages,” the ministry said.
Uganda plans to begin commercial crude oil production from fields in the western part of the country in 2026, a development expected to reshape the country’s fiscal and economic trajectory.
