Uganda faces economic pressure from rising debt and tightening liquidity

Uganda is facing significant economic strain as national public debt reaches UGX 143.92 trillion. This macroeconomic burden is manifesting as microeconomic hardship for local traders and small businesses, who report declining sales and increased pressure from aggressive taxation and rising costs for rent and utilities.

Simultaneously, the country is experiencing tightening domestic liquidity and inflationary pressures. The Bank of Uganda recently raised the cash reserve ratio to 13.5%, reducing the amount of money circulating in the economy. These conditions have impacted the Treasury bond market, with recent auctions showing rising yields. For instance, the 25-year bond recorded a cutoff yield of 16.25%, reflecting increased borrowing costs and shifting investor expectations.