Uganda’s public debt has increased markedly over the past financial year, reflecting intensified public expenditure linked to the country’s preparations for commercial oil production. According to the Ministry of Finance, Planning and Economic Development’s latest Debt Sustainability Analysis Report for the 2024 to 2025 financial year, total public debt rose from 25.59 billion United States dollars in 2023 to 2024 to 32.24 billion United States dollars by 30 June 2025. The debt to gross domestic product ratio correspondingly increased from 46.6 per cent to 50.9 per cent over the same period, with projections indicating a possible peak of 55.5 per cent by June 2026 before declining below 50 per cent by the 2030 to 2031 financial year.
The Ministry attributes the rise primarily to the repayment of advances from the Bank of Uganda and increased development expenditure, particularly in the oil and gas sector as Uganda prepares for first oil. Uganda’s upstream petroleum projects in the Albertine Graben, including Tilenga and Kingfisher, alongside the East African Crude Oil Pipeline, represent one of the most significant energy investments currently under way on the continent. The government has consistently maintained that these investments are intended to expand fiscal space and support long term structural transformation once oil revenues materialise.
International financial institutions have previously assessed Uganda’s debt as facing a moderate risk of distress while remaining sustainable under current macroeconomic assumptions. The International Monetary Fund’s Debt Sustainability Analysis for Uganda has historically emphasised that oil revenues, if prudently managed, could strengthen fiscal buffers while cautioning against front loading expenditure without corresponding revenue mobilisation. Similarly, the African Development Bank has noted that public investment efficiency and growth outcomes are central to maintaining debt sustainability across African economies, including Uganda.
Academic scholarship provides a nuanced perspective on the intersection between oil wealth and public debt management. Bulime, Mukisa and Bbaale in the Tanzanian Economic Review analyse Uganda’s fiscal reaction function and conclude that sustainability depends on credible fiscal consolidation and revenue mobilisation frameworks. Lakuma’s macroeconomic assessment of Uganda’s oil wealth argues that saving mechanisms and intergenerational equity provisions are critical to avoiding volatility associated with resource dependence. Nahabwe’s recent study in the BRICS Journal of Economics examines Uganda’s debt to pay debt dynamics and underscores the importance of disciplined borrowing strategies during periods of infrastructure expansion. Shah, Rafique and Afridi’s panel analysis in the Journal of Public Affairs identifies structural vulnerabilities in several African economies where rising debt ratios require strengthened institutional responses.
Broader continental studies reinforce these findings. Kararach, Oduor, Sennoga and Odero, writing for the African Development Bank, stress that the productivity of public investment determines whether borrowing translates into sustainable growth. Research by Mawejje and Bategeka on intergenerational equity in Uganda’s oil sector highlights the importance of sovereign wealth mechanisms and transparent revenue governance. Rwengabo’s comparative work on oil sector sustainability draws lessons from Latin American experiences for Uganda’s policy architecture. Lakuma, Asiimwe, Sserunjogi and Kahunde further examine sustainable and environmentally responsive debt pathways in Uganda, situating fiscal policy within wider social and ecological considerations.
Uganda’s authorities state that fiscal consolidation measures are under implementation, including enhanced domestic revenue mobilisation, expenditure rationalisation and a growth strategy intended to expand the productive base of the economy. The expectation of future oil receipts forms part of the medium term fiscal framework. However, analysts caution that oil price volatility, global energy transition dynamics and execution risks associated with large infrastructure projects remain material variables. Research by Huxham, Anwar and Strutt for Climate Policy Initiative highlights the implications of global low carbon transitions for Uganda’s planned oil sector, noting that external market conditions will shape fiscal outcomes.
Within a pan African context, Uganda’s experience reflects a broader developmental dilemma facing resource rich states across the continent. Infrastructure deficits, demographic expansion and aspirations for industrialisation often necessitate significant public investment, frequently financed through borrowing. The sustainability of such borrowing depends not only on projected commodity revenues but also on governance quality, transparency and the inclusivity of growth outcomes. As Wolf and Potluri observe in their examination of Uganda’s oil governance, institutional design and political economy considerations are central to ensuring that extractive industries contribute to long term national development rather than short term fiscal strain.
Uganda’s debt trajectory therefore sits at the intersection of ambition and prudence. The current increase in public debt is closely tied to preparatory expenditure for oil production, a sector anticipated to generate substantial revenue streams. Whether projected declines in the debt ratio after 2026 materialise will depend on timely project completion, stable macroeconomic management and the effective translation of resource wealth into diversified economic growth.
