Uganda’s public debt has grown swiftly over the last ten years, reaching Shs126.19 trillion by December 2025, but the government insists the borrowed funds have been invested in strategic projects that are expanding the country’s productive capacity and laying the foundation for long-term economic transformation.
According to the Ministry of Finance, Planning and Economic Development, Uganda’s total public debt stood at $34.86 billion (Shs126.19 trillion) by the end of December 2025. External debt accounted for $15.84 billion, while domestic debt stood at $19.02 billion, bringing the country’s debt-to-GDP ratio to about 53 percent.
The figures were highlighted in the 2026/27 Budget Speech presented by Finance Minister Henry Musasizi, who argued that public debt should not be viewed in isolation but rather alongside the assets created and the economic returns generated from the investments financed through borrowing.
“Public debt should always be assessed alongside the assets it finances and the economic returns it generates,” the minister stated.
Musasizi noted that over the past ten years, Uganda has deliberately borrowed to finance large-scale infrastructure and development projects aimed at supporting industrialization, improving connectivity, enhancing productivity and creating jobs.
“Over the past 10 years, Uganda’s debt has financed strategic investments that are transforming the productive capacity of our economy,” he said.
The biggest share of the borrowed resources, amounting to 31.1 percent, was invested in integrated transport infrastructure. This includes the construction and upgrading of national roads, bridges, airports, ferries and railway infrastructure designed to reduce transport costs and improve market access for businesses and farmers.
The government has in recent years undertaken major road projects across the country, continued rehabilitation of the metre-gauge railway, commenced construction of the Standard Gauge Railway from Malaba to Kampala and expanded airport infrastructure, including the completion of Kabalega International Airport and expansion works at Entebbe International Airport.
Another 19.3 percent of the borrowed funds were invested in electricity infrastructure. Government says these investments have expanded power generation capacity, strengthened transmission networks and improved access to electricity, particularly in rural areas.
Installed electricity generation capacity has now reached more than 2,000 megawatts, while several transmission lines and substations have been constructed to support industrial growth and improve reliability of supply.
Water infrastructure accounted for 10.3 percent of debt-financed investments. The funds have been used to expand access to safe and clean water, develop irrigation schemes and construct water-for-production facilities intended to boost agricultural productivity and climate resilience.
The report indicates that water access has continued to improve, with more than 71 percent of Ugandan households now having access to improved water sources.
Government further revealed that 9.2 percent of the borrowed resources were invested in agro-industrialization, a sector regarded as central to Uganda’s ambition of achieving tenfold economic growth.
The investments have supported agricultural research, irrigation infrastructure, mechanization, value addition and agro-processing initiatives aimed at increasing farmer incomes and reducing dependence on the export of raw commodities.
The country has also invested heavily in agricultural innovations, including the anti-tick vaccine project, expansion of coffee cultivation and irrigation schemes across different regions.
Education and health infrastructure received 7.7 percent of the debt-funded investments.
The resources have financed the construction and rehabilitation of schools, hospitals and specialized health facilities, including regional referral hospitals and medical research institutions.
Government says these investments have contributed to improved access to education and healthcare services while supporting the development of a productive workforce needed to drive economic growth.
Housing and urban development projects accounted for 6.3 percent of borrowed resources. These include investments in urban infrastructure, roads, drainage systems and housing developments aimed at supporting Uganda’s rapidly urbanizing population.
Industrial parks and industrial development received 2 percent of the debt portfolio. While relatively smaller in share, officials say the investments have played a key role in attracting investors and expanding manufacturing activities.
Uganda currently hosts thousands of factories, many of them located within industrial parks developed with government support.
An additional 7 percent of the debt was invested in other strategic sectors, including the National Backbone Infrastructure project that has expanded internet connectivity, science and technology initiatives, innovation programs and regional development projects.
The government argues that these investments have helped build one of the strongest foundations for socio-economic transformation on the African continent.
The Ministry points to a number of economic indicators to support its position, including sustained economic growth, rising exports, increased foreign direct investment and expanding employment opportunities.
Uganda’s economy is projected to grow by 6.4 percent in the current financial year, up from 6.3 percent the previous year. The economy is expected to reach approximately Shs250.4 trillion by the end of June 2026.
Even more significantly, the government projects economic growth to accelerate to 10.2 percent in the 2026/27 financial year following the commencement of commercial oil production.
Officials believe this growth will generate additional revenues, create jobs and strengthen the country’s ability to service its debt obligations.
The budget report further notes that Uganda’s exports of goods and services have increased by more than 200 percent over the last five years, reaching $18.04 billion in the year ending March 2026, compared to $5.93 billion recorded four years earlier.
At the same time, foreign direct investment has remained strong at $3.2 billion, while remittances from Ugandans working abroad have risen to $2.8 billion.
The government argues that these gains have been made possible largely because of investments in infrastructure, energy, industrialization and other productive sectors financed through both domestic resources and borrowing.
As public debate continues over the country’s rising debt burden, the Ministry of Finance has called for informed discussions that examine not only how much Uganda has borrowed but also the long-term impact of the investments financed through that borrowing.
“As we engage in post-budget dialogues, informed debates should be on both the money borrowed and how it has been used,” the Ministry said.
Despite concerns from some economists over increasing debt levels, the government maintains that Uganda’s debt remains sustainable and is projected to remain so in the medium and long term as major investments begin yielding economic returns.
“Uganda’s public debt remains sustainable and is projected to stay so over the medium and long term,” the ministry said.
