The Government of Uganda has fully repaid Shs1.8 trillion in outstanding borrowing from the Bank of Uganda (BoU) as of the end of June 2025, the central bank revealed in its September 2025 State of the Economy report.
“This obligation arose from unreimbursed redemptions of matured government securities and was settled in accordance with the service level agreement, which mandates repayment within 60 days after the end of the fiscal year,” the report stated.
The timely repayment has helped absorb excess liquidity in the financial system, supporting the effective implementation of monetary policy.
“This demonstrates continued commitment to prudent fiscal management amid tightening financing conditions,” the BoU noted, emphasizing the role of strong coordination between fiscal and monetary policies in maintaining macroeconomic stability.
While public debt in Uganda remains sustainable, the central bank cautioned about emerging vulnerabilities. External debt growth rose moderately by 6.4% in July 2025 compared to the same period in 2024. The report also highlighted a gradual increase in domestic borrowing.
“The stock of public debt continued to expand moderately, driven largely by domestic borrowing,” the BoU said.
Nominal public debt as a share of GDP edged up to 51.3% in June 2025 from 46.9% a year earlier, while the present value of debt-to-GDP rose from 39.9% to 45.0%, remaining within sustainable thresholds.
The cost of debt has also increased modestly. Interest payments rose to 4.4% of GDP in FY2024/25 from 3.5% in FY 2023/24, reflecting the growing share of higher-cost domestic financing in the overall debt portfolio.
“This trend underscores the importance of continuously monitoring debt dynamics to safeguard fiscal sustainability while supporting economic growth,” the report showed.
