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UDN WEEKLY NEWSLETTER 438th EDITION 2024

UGANDAS DEBT SITUATION AND THIS YEAR BORROWING PLAN

Uganda’s public debt stock has been on the rise in the last five years from UGX 42.20 trillion in June 2019 to UGX 86.75 trillion in June 2023 representing a 51 percent growth. By the end of December 2023, total public debt had increased to UGX 93.38 trillion, marking a notable rise of UGX 12.61 trillion from UGX 80.77 trillion recorded at end December 2022. This indicates a 13.6% growth in debt stock over the span of a year. The rise is on account of progressive acquisition of commercial loans for budget support and costs associated with increased domestic borrowing.

Despite the increase in GDP, the last five years Uganda’s debt accumulation has more than doubled the growth in GDP hence putting the country on high risk of debt distress evidenced by debt restructuring and high cost of borrowing offered by the lenders. This suggests that the high debt levels are likely to constrain Uganda's ability to achieve its ambitious economic growth targets outlined in the National Development Plans and Uganda Vision 2040.In FY2024/25 budget 41 trillion was allocated to debt servicing consuming a significant portion of government revenues, potentially crowding out critical public investments in infrastructure, social services, and other development priorities.