By Sarah Mbabazi
Uganda’s growing public debt should no longer be viewed as a concern for economists and policymakers alone. It is a national issue whose consequences touch every citizen.
According to the Ministry of Finance, Uganda’s public debt stood at approximately Shs116.2 trillion (US$32.3 billion) by June 2025, representing 51.3 per cent of Gross Domestic Product (GDP). The debt stock had risen from Shs94.7 trillion a year earlier, with domestic debt accounting for Shs60.3 trillion and external debt Shs55.9 trillion.
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While borrowing has enabled the Government to finance roads, dams, energy projects and industrial parks, the pace of debt accumulation raises a critical question: are we borrowing to transform the economy, or merely postponing financial problems for future generations?
No country develops without investment, and borrowing is often necessary where domestic resources are limited. However, loans only make economic sense when they create value that exceeds their cost.
A road that boosts trade, a power project that attracts industries, or an irrigation scheme that increases agricultural productivity can justify borrowing. But when projects are delayed, poorly managed or fail to deliver expected returns, the country remains with a debt burden long after the promised benefits have disappeared.
The most worrying aspect of Uganda’s debt story is not borrowing itself, but the growing cost of repayment.
As public debt rises, the Government is forced to allocate larger portions of national revenue towards servicing loans and paying interest. The Ministry of Finance reported that interest payments accounted for 26.2 per cent of domestic revenue in the 2024/25 financial year and projected that the figure could rise to 30.2 per cent by FY2026/27.
The growing reliance on domestic borrowing to finance budget requirements also has implications for the cost of debt. Uganda’s June 2025 debt bulletin shows that domestic debt had risen to Shs60.3 trillion, slightly above external debt at Shs55.9 trillion. The Ministry attributed the increase partly to greater use of Treasury bonds and bills to meet financing needs.
This means money that could otherwise support healthcare, education, agriculture, job creation and social services is increasingly being absorbed by debt obligations.
The effects may not always be obvious, but they are real. An underfunded health centre, an overcrowded classroom or a delayed government programme can reflect the limitations created by competing fiscal demands.
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Every shilling spent on debt repayment is a shilling that cannot be spent on another national priority. If borrowing continues to grow faster than Government revenue, the country risks placing increasing pressure on future budgets and taxpayers.
The solution is not to reject all borrowing, but to demand accountability and value for money.
Citizens should take a greater interest in how public resources are used, while Parliament and oversight institutions must ensure transparency at every stage of the borrowing process.
Government should prioritise projects that generate measurable economic returns and strengthen domestic revenue collection to reduce dependence on loans. The Ministry of Finance has also identified stronger domestic revenue mobilisation as part of its strategy for maintaining debt sustainability.
The goal is not to create fear about debt, but to encourage responsibility.
Uganda’s progress should not be measured by the amount borrowed, but by the results achieved from that borrowing.
If accountability becomes the guiding principle, public debt can remain a tool for development. If not, it risks becoming a burden that future generations could spend decades struggling to repay, limiting the country’s ability to achieve sustainable and inclusive growth.
