The Opposition in Parliament says Uganda is entering a new five-year fiscal cycle with a widening gap between its promised fiscal discipline and the mounting pressures on public finances. It points to public debt exceeding the outgoing Charter for Fiscal Responsibility’s ceiling, persistently elevated fiscal deficits and rising debt-interest payments that are consuming an increasing share of domestic revenue.
These concerns form the centrepiece of its response to the FY2026/27–FY2030/31 Charter, which calls for stronger parliamentary oversight of public borrowing, government expenditure and compliance with fiscal targets.
Fiscal documents accessed by URN from the Ministry of Finance, Planning and Economic Development acknowledge that several targets in the outgoing Charter are unlikely to have been achieved, linking the slippage to weaker-than-anticipated revenue mobilisation, higher expenditure, delayed oil production and increased borrowing.
Appearing before Parliament’s Committee on Budget on Monday, Bank of Uganda Governor Dr Michael Atingi-Ego warned against excessive domestic borrowing, which he said, “could push up interest rates and crowd out private-sector credit.”
The domestic market can absorb the planned Shs12.7 trillion borrowing, he noted, but “exceeding that projected level would risk tightening credit conditions for businesses.” Private-sector credit grew 16.1% year-on-year to June ’26, a figure the Governor presents as evidence of resilience that must not be undermined by heavier government claims on the same pool of funds.
Shadow Finance Minister Gyaviira Lubowa Ssebina, the Member of Parliament for Nyendo-Mukungwe Constituency, told the committee that Uganda is attempting to consolidate its finances while simultaneously financing an ambitious investment and growth programme, an inherently difficult starting point for the country’s third Charter.
The second Charter for Fiscal Responsibility (FY2021/22–FY2025/26) was built around measurable limits intended to keep public finances sustainable: nominal public debt below 50% of GDP by FY2025/26; domestic debt-interest payments reduced to 12.5% of total revenue excluding grants; publicly guaranteed debt below 5% of GDP; and a progressive reduction of the overall fiscal deficit to no more than 3% of non-oil GDP.
It also required non-oil revenue to GDP to rise by at least 0.5% annually and stipulated that growth in recurrent spending should not exceed growth in non-oil revenue.
The Charter’s deeper purpose, as Gyaviira explained, was to create fiscal space for development while preventing borrowing and recurrent expenditure from progressively crowding out the government’s ability to deliver services.
The Ministry of Finance’s Annual Macroeconomic and Fiscal Performance Report for FY2024/25 put Uganda’s public debt at US$32.3 billion (approximately Shs127.33 trillion), or about 51% of GDP as of June 2025, slightly below the interim target of 51.2%. The debt objective therefore appeared on course at that stage. The report recorded a fiscal deficit of 5.8% of GDP against charter target of 4.2%.
Finance Minister Henry Musasizi attributed the larger deficit to higher expenditure, including supplementary budgets for climate-related needs, the Umeme buyout and other emerging priorities.
“Uganda was broadly within the Charter’s debt trajectory in FY2024/25, but it was already substantially outside its deficit trajectory,” he observed.
By December 2025, total public debt had reached US$34.86 billion (equivalent to roughly Shs137.42 trillion), or 52.7 percent of GDP. Domestic debt alone stood at US$19.02 billion (Shs68.86 trillion), while external debt was US$15.84 billion.
Between June and December 2025 debt stock rose sharply, with domestic debt increasing particularly fast, from Shs60.34 trillion to Shs68.86 trillion. Governor Atingi-Ego linked these trends directly to monetary and financial-stability concerns.
He called for Uganda’s fiscal debt path to be revisited, particularly for FY2026/27, warning that the Charter’s projections could become unattainable if the debt base is inconsistent with current figures.
Risks to the debt path should be assessed every year, he argued, and the Charter should require annual reporting on Government’s domestic financing strategy and its impact on private-sector credit.
The latest annual debt bulletin confirms the scale of the management challenge. Interest payments stood at 5% of GDP, with domestic debt alone accounting for 4.4%. The weighted average interest rate on total debt had risen to 9.5%; domestic debt carried a weighted average of 15.5%.
The International Monetary Fund – IMF’s 2026 assessment projected interest payments would absorb almost one-third of domestic revenue in FY2025/26, while total debt service would reach about 10 percent of GDP, up from roughly 6–7 percent before the pandemic.
The government’s own medium-term projections point to continued pressure. Its FY2026/27 framework projected interest payments of Shs13.004 trillion in FY2026/27, rising to Shs15.188 trillion by FY2029/30. Domestic interest alone was projected to climb from Shs10.935 trillion to Shs13.045 trillion over the same period. Average time to maturity across the total portfolio was 8.6 years in December 2025, but only 7.6 years for domestic debt.
More significantly, 19.3% of domestic debt was due to mature within one year (vs 5.9% of external debt), so the government must continually refinance a substantial portion of its domestic obligations.
Treasury bills accounted for about 12.6 percent of domestic debt; bonds made up the rest, with ten-year bonds representing 31.5 percent of the portfolio. Public debt is not the only fiscal liability Parliament must watch. Government-guaranteed borrowing stood at US$200.08 million, with approximately US$76.31 million outstanding.
Non-guaranteed debt and other liabilities of state-owned enterprises and extra-budgetary units further illustrate why headline central-government figures do not capture every potential claim on public resources. There is evidence of progress on the revenue side.
In FY2024/25 total tax revenue reached Shs29.87 trillion, exceeding the target by Shs504.98 billion, and the tax-to-GDP ratio rose from 12.7 percent to 13.1 percent, close to the Charter’s 0.5-percentage-point annual benchmark.
Yet total government revenue, including grants, fell short of target by 4.1%. Non-tax revenue reached only Shs2.21 trillion against a target of Shs2.62 trillion, as grants performed at just 47% of projection.
As Gyaviira noted, the problem is not simply that government cannot collect revenue; but revenue growth hasn’t kept pace with the scale and composition of expenditure and financing requirements.
Minister Musasizi’s presentation of the new framework projects nominal public debt peaking at 55.1 percent of non-oil GDP in FY2027/28 before declining to 50 percent by FY2030/31.
Commercial borrowing relative to domestic non-oil revenue is to fall from 33.7 percent in FY2026/27 to 19.3 percent by FY2030/31, while total interest payments are projected to decline from 32.5 percent to 20 percent of domestic non-oil revenue.
Real GDP growth is projected at 7 percent in FY2025/26 and 10.4 percent in FY2026/27 once oil flows begin. Domestic revenue is expected to rise from Shs37.23 trillion in FY2025/26 to Shs46.56 trillion in FY2026/27, with oil revenue projected at Shs3.68 trillion in the first year of production.
The IMF has cautioned that Uganda’s debt vulnerabilities have increased and has recommended stronger revenue mobilisation and expenditure reforms to put debt on a declining path. It has also noted that the oil-revenue framework is designed to shield the budget from price volatility and preserve benefits for future generations.
The outgoing Charter already provided mechanisms for dealing with exceptional circumstances under Section 7 of the Public Finance Management Act. Deviations for natural disasters, severe economic shocks or other significant unforeseen events require parliamentary approval and reporting.
The Charter further requires the Budget Framework Paper to set expenditure ceilings consistent with projected revenue and the fiscal balance, while annual Fiscal Risk Statements must identify debt, guarantees, public-private partnerships and other risks.
Gabriel Okumu, Member of Parliament for Okoro County in Zombo district, warned that the budget and national-economy committees of Parliament must do their best to discourage heavy borrowing.
The Ministry’s half-year FY2025/26 report stated that final compliance with the outgoing Charter would be assessed only in the annual fiscal performance report due in October 2026.Yet the third Charter is already under consideration.
