LONDON, Aug 20 – Uganda is seeking to borrow up to €207.7 million ($242.55 million) from Citibank to finance the construction of a major road in the country’s eastern region, according to the finance ministry.
Finance Minister Henry Musasizi told lawmakers that the proposed road is expected to strengthen connectivity across Uganda and provide an alternative route linking the northern and southern parts of the country. The ministry disclosed the proposed financing in a post on X late Wednesday.
Musasizi said the road was “expected to improve connectivity…and provide an alternative transport link between northern and southern Uganda.”
The project is intended to improve domestic transport links and support the movement of people and goods across the country. However, the proposed external borrowing comes as Uganda faces growing pressure from rising public debt and higher debt-servicing costs.
The Bank of Uganda has previously warned that increasing debt-service obligations are consuming resources that could otherwise be directed towards key social sectors, including education and healthcare.
Uganda’s debt outlook has also drawn attention from international financial institutions. In its latest Article IV consultation, the International Monetary Fund projected that the country’s debt-to-GDP ratio would rise to 55.5% in the fiscal year that began in July and increase to nearly 60% by the 2030/31 financial year.
The IMF also warned that Uganda was facing a “high debt service burden”, highlighting the growing challenge of balancing infrastructure investment with fiscal sustainability.
Credit-rating agency Fitch has similarly identified public debt and borrowing costs as constraints on Uganda’s credit profile. Earlier this month, Fitch affirmed Uganda’s sovereign rating at “B” with a stable outlook, while pointing to rising public debt and a high interest burden as factors limiting the rating.
The proposed Citibank financing therefore comes at a time when Uganda is attempting to maintain infrastructure investment while managing increasingly constrained public finances. Roads remain a major component of the country’s development strategy, particularly as the government seeks to improve connectivity and support economic activity outside major urban centres.
The financing terms, including the final amount to be borrowed and the implementation timeline for the road project, will determine its eventual impact on Uganda’s debt position. For policymakers, the challenge will be to ensure that the economic returns from improved infrastructure are sufficient to justify the additional borrowing burden.
