Uganda public debt and economic instability

Uganda is experiencing significant economic strain driven by rising public debt and tightening liquidity. The Bank of Uganda has warned that the nation’s projected debt path may be at risk, noting that total public debt could reach approximately Shs158.6 trillion, or about 57.7% of non-oil GDP. The central bank has advocated for a broader definition of public debt to include Shs7.6 trillion in securitised arrears accumulated following the Covid-19 pandemic.

As debt reached UGX 143.92 trillion, the macroeconomic burden has begun to impact local traders and small businesses through increased taxation and rising utility costs. To manage inflationary pressures, the Bank of Uganda raised the cash reserve ratio to 13.5%, which has reduced circulating money and impacted the Treasury bond market. Recent auctions have seen rising yields, such as a 25-year bond recording a cutoff yield of 16.25%.

In response to these fiscal challenges, members of Uganda’s Parliamentary Committee on National Economy traveled to Nigeria for a training workshop. The program aims to enhance the capacity of lawmakers to scrutinize government borrowing, loan guarantees, and public expenditure.