The Minister of Finance, Planning and Economic Development, Henry Musasizi, has assured Parliament that Uganda’s public debt remains sustainable despite a sharp increase in the country’s debt stock.
Minister Musasizi, together with officials from the Ministry of Finance, appeared before the Parliamentary Committee on the National Economy to brief MPs on the country’s debt position, debt sustainability, external financing, contingent liabilities and domestic arrears on Tuesday.
He told the committee that Uganda’s total public debt increased by 19.96 per cent, from $29.06 billion (about Shs105.17 trillion) at the end of December 2024 to $34.86 billion (about Shs126.16 trillion) by December 2025.
Of the total debt, $15.84 billion was external debt while $19.02 billion was domestic debt.
Minister Musasizi attributed the increase largely to increased domestic borrowing to finance the fiscal deficit and continued funding of strategic infrastructure projects intended to support economic transformation and long-term growth.
He said the sustainability of public debt should not be judged solely by the size of the debt stock, but also by the economy’s ability to service its obligations.
“Debt sustainability should be assessed not only by the nominal debt stock, but also by the economy’s capacity to service the debt,” Musasizi said.
As a share of the economy, public debt rose from 46.86 per cent of GDP in June 2024 to 50.90 per cent in June 2025.
Despite the increase, the minister said the debt remains sustainable, citing government’s fiscal consolidation measures, including strengthening domestic revenue mobilisation, rationalising public expenditure and improving spending efficiency.
He also pointed to anticipated oil revenues and implementation of the government’s Ten-Fold Growth Strategy as measures expected to strengthen the economy’s capacity to meet its debt obligations.
However, Musasizi acknowledged that the growing debt stock poses risks, particularly through the increasing cost of debt servicing.
He said government would strengthen debt management, prioritise concessional and cost-effective financing, improve domestic revenue mobilisation and ensure borrowed funds are channelled into productive investments capable of generating returns.
On external financing, Musasizi said commitments for ongoing externally financed projects and programmes stood at $18.23 billion as of December 2025.
Of this amount, $8.59 billion had been disbursed, representing 47.16 per cent.
The minister said government was working with implementing agencies and development partners to accelerate project implementation and disbursement while ensuring that the projects deliver the intended economic and social benefits.
Meanwhile, contingent liabilities increased from Shs18.96 trillion in June 2024 to Shs20.57 trillion in June 2025, representing an increase of Shs1.61 trillion, or 8.5 per cent.
Musasizi said the increase was largely linked to legal proceedings against the Central Government, including land compensation disputes, contractual claims arising from infrastructure projects and other statutory obligations.
On domestic arrears, he said the audited stock for the 2024/25 financial year stood at Shs8.68 trillion.
Of this amount, Shs8.54 trillion, representing 98.45 per cent, was attributed to the Central Government, while Shs134.83 billion, or 1.55 per cent, was owed by local governments.
Musasizi said government was strengthening commitment controls and expenditure management and enforcing the Public Finance Management framework to prevent the accumulation of new arrears.
He added that government would progressively clear verified and approved obligations.
The minister reaffirmed government’s commitment to responsible borrowing and prudent debt management, with emphasis on productive investment, fiscal sustainability and value for money.
