Uganda is preparing to borrow a staggering Shs32.075 trillion, representing 44.3% of its Shs72.367 trillion 2025/26 national budget, as the country grapples with dwindling domestic revenues and growing expenditure pressures.
The development reflects the country’s heavy dependence on debt to sustain its fiscal ambitions, even as concerns mount over Uganda’s rising public debt burden and the efficiency of projects funded through loans.
According to projections by the Ministry of Finance, the government expects to raise Shs34.051 trillion from taxes, accounting for only 47% of total budget financing, while non-tax revenue and grants will generate Shs2.745 trillion, equivalent to just 3.7% of the financial requirements. The remaining Shs32.075 trillion will be borrowed from both domestic and external lenders.
Last week, Parliament approved eight new loans amounting to Shs9.755 trillion and a World Bank grant worth $328.3 million (Shs1.146 trillion), sparking renewed debate on the government’s growing appetite for borrowing.
Among the loans approved was Euro230.4 million (Shs925.9 billion) for the design and construction of the Jinja–Mbulamuti–Kamuli–Bukungu road (127km) and Jinja City roads (10km).
Another loan of $121.9 million (Shs425.7 billion) from the African Development Bank was cleared to finance the South Sudan–Uganda Power Interconnection Project. The project triggered heated debate, with legislators questioning why the government is exporting electricity to South Sudan when many Ugandans remain in the dark.
“If government can extend power to Juba, why can’t it connect villages in our own country that still rely on kerosene lamps?” one MP protested.
The government, however, defended the loan, saying Uganda must export excess electricity to reduce payments for deemed energy; the power generated but not consumed locally.
Equally contentious was the approval of Euro192.9 million (Shs775.2 billion) from Citibank for the Agricultural Production, Quality, and Market Access Project. The Committee on National Economy had initially raised red flags, noting that the Ministry of Agriculture was already struggling with idle loans worth $720.6 million (Shs2.5 trillion).
“The Ministry must first build technical capacity before seeking new loans,” the committee warned, urging the establishment of a project management unit with clear timelines and measurable deliverables.
The borrowing gear also extended to the oil and road infrastructure sector, with Parliament approving Euro115.8 million (Shs465.5 billion) from Standard Chartered Bank to finance the Karugutu–Ntoroko–Rwebisengo roads, and $20 million (Shs69.8 billion) from the Arab Bank for Development in Africa (BADEA) for upgrading the Nebbi–Goli road to enhance trade with South Sudan.
Another controversial approval was for the Busega–Mpigi Expressway, where costs have risen from Shs721 billion in 2016 to Shs1.748 trillion today. Parliament nonetheless approved additional financing of Euro188 million (Shs755.8 billion) from the African Development Bank and Euro28.3 million (Shs113.7 billion) from the African Development Fund.
In the health sector, Parliament endorsed loans to improve cancer care, including Euro9.4 million (Shs37.7 billion) from Unicredit Bank Austria for the Mbale Oncology Centre, and $36.5 million (Shs127.4 billion) from the Islamic Development Bank for Arua Oncology Centre and radiotherapy equipment for Mbale.
Government insists these investments will decentralize cancer treatment and decongest the Uganda Cancer Institute at Mulago.
The largest single loan approved was US$1.341 billion (Shs4.68 trillion) from the World Bank’s International Development Association, alongside grants worth US$328.3 million (Shs1.146 trillion). The funds will support a series of initiatives, including NUSAF IV, the Development Response to Displacement Impacts Project (DRDIP), the Uganda Learning Acceleration Program (ULEARN), USMID and PIMPLUS.
Initially, this loan was halted by Parliament due to the Ministry of Finance’s failure to disclose terms of the USMID component.
Another substantial facility; Euro342.5 million (Shs1.376 trillion) was approved for the Karuma–Tororo 400KV transmission line and Ntinda substation project, further expanding the government’s infrastructure-heavy borrowing pattern.
The debt now finances almost half of the national budget, raising questions about sustainability, value for money and the nation’s growing vulnerability to external shocks.
