KAMPALA- The Ministry of Finance has revealed that within 11 years, Uganda has borrowed over Shs43Trn, and further admitted to being stuck with loans worth Shs16.405Trn that remain undisbursed.
The details are contained in the 2025/26 National Budget Framework Paper, where the Ministry also raised concern over the Shs12.72Trn to be spent in servicing debt, obtained from the Shs31.98 trillion taxes to be collected in 2024/25.
Documents before Parliament indicate that between 2013 to 2024, Government has borrowed US$11,855,110,000 (UGX43.252Trn), but of this amount, US$7,358,600,000 (UGX26.847Trn) has been disbursed while US$4,496,510,000 (UGX16.405Trn) remains undisbursed.
The Ministry further indicated that Integrated Transport Infrastructure & Services programme accounts for the lion share of the loans borrowed whose total commitment were to a tune of US$3,470,930,000 (UGX 12.660Trn), and of this, the total disbursement is US$2,146,720,000 (UGX 7.830Trn), while the total undisbursed loans are to tune of US$1,324,210,000 (UGX 4.830Trn).
Energy Development programme comes at the second place with total commitment loans worth US$3,274,380,000 (UGX 11.943Trn), of which the total disbursed loans are US$2,390,840,000 (UGX8.721Trn), while the total undisbursed loans stand at US$883,540,000 (UGX3.222Trn).
The Natural Resources, Environment, Climate change & Water programme hold the third spot, with loans worth US$1,366,460,000 (UGX 4.984Trn) borrowed, yet only US$525,550,000 (UGX 1.917Trn) was disbursed, leaving the sectors with idle loans to a tune of US$840,910,000 (UGX 3.067Trn).
However, despite the huge chunk of idle loans lying with Government and are accumulating interest, Government has defended its huge appetite for loans by some of the achievements arising from Government external borrowing since 2013 citing the increment of the share of the paved national road network that it claims has nearly doubled from 15% (3,121km) in FY 2012/13 to 29% (6,133km) in FY 2022/23.
Government also cited the construction of a second International Airport (Kabelega International Airport) and Entebbe International Airport expansion as part of the achievements from the borrowing and further boosted about the Meter Gauge Railway is undergoing rehabilitation (Malaba-Kampala and Tororo-Gulu).
To further defend its borrowing, the Ministry of Finance noted that the borrowing has increased electricity generation capacity from 595 MW in FY 2010/11 to over 2,000 MW in FY 2023/24, further adding that the number of industrial consumers on the power grid increased by nearly 8-fold to 4,065 in 2023 from 539 in 2013. Overall access to electricity has increased to 28% in FY 2020/21 from 13.89% in 2013/14.
Another defence fronted for Uganda’s reliance on external financing was the increased of the network of piped water to 22,668km in FY 2022/23 from 14,466km in FY 2017/18; and storage capacity for water for irrigation has increased to 52.6 million cubic meters from 26.5 million cubic meters in the same period.
“The national backbone infrastructure has been expanded to 4,300kms in FY 2022/23 from 1,380Kms in FY 2010/11 and Internet penetration has risen to 59% in 2023 from 0.2% in 2008. The number of classrooms in primary schools has increased to 231,238 in 2024 from 164,833 in 2017,” read in part the document.
However, despite the glossy picture painted about the achievements Uganda has attained from these loans, the Ministry of Finance admitted that the huge public debt is straining Uganda, as a big chunk of the taxes collected are being channeled towards debt servicing.
“Although public debt remains sustainable, the country is spending about one-third of its total domestic revenues towards servicing debt, which was equivalent to Shs8.76 trillion in FY 2023/24. Debt service is projected to rise to Shs12.72 trillion out of total domestic revenue of Shs31.98 trillion this financial year. This reinforces the need to increase domestic revenue mobilization, target public expenditure to areas which have high economic and social returns, and prudent debt management,” read in part the document.
The Ministry of Finance also provided an update on Uganda’s public debt reporting that the total public debt stock stood at US$25.6 billion, equivalent to Shs94.9trillion, as at 30th June 2024, where the share of external and domestic debt to the total public debt stock was 57.2% and 42.8%, respectively.
According to the Ministry of Finance, the public debt stock has increased since FY 2008/09, due to Government strategic investments in infrastructure such as oil and tourism roads, water for production and domestic use, health infrastructure, industrial parks, hydropower plants, Entebbe and Kabalega International Airports, and the National CCTV Project, among others.
The preliminary projected Resource Envelope for FY 2025/26 amounts to Shs57.441 trillion, which has reduced by Shs14.695 trillion from Shs72.137 trillion of the current FY 2024/25. This Budget will be financed using both our domestic and external resources.
