Uganda’s public debt surged in the 2024/25 financial year, largely due to increased spending in preparation for the country’s first commercial oil production, according to a report released by the Ministry of Finance, Planning and Economic Development.
The Debt Sustainability Analysis Report shows total public debt rising from $25.59 billion in 2023/24 to $32.24 billion in 2024/25, marking a significant jump within a single year. The increase is attributed mainly to repayments of Bank of Uganda advances and elevated development expenditures, particularly in the oil and gas sector, which are intended to support infrastructure, exploration, and production readiness.
As a result, Uganda’s debt-to-GDP ratio climbed from 46.6% in June 2024 to 50.9% in June 2025. Projections indicate that the ratio could reach 55.5% by June 2026, before gradually declining below 50% by the 2030/31 financial year. Despite the increase, the ministry emphasizes that Uganda’s debt remains at moderate risk of distress and is sustainable over the medium to long term.
The government’s strategy to manage the rising debt includes fiscal consolidation measures, which focus on boosting domestic revenue collection, rationalizing public expenditures, and leveraging anticipated revenues from oil production. The report notes that Uganda’s “tenfold growth strategy” and future oil-related income are expected to support debt sustainability while funding critical infrastructure and development projects.
Analysts say the rising debt underscores Uganda’s ambitious oil development plans, including building refineries, upgrading transport networks, and ensuring local content in oil operations. Preparations for first oil, expected in the coming years, require substantial upfront investment, which the government argues is necessary to secure long-term economic gains and transform the country into an energy-exporting economy.
The report also points out that while the short-term increase in debt is significant, Uganda’s overall fiscal trajectory remains positive, with expected oil revenues helping to stabilize public finances. Fiscal reforms, including improved tax collection and prudent borrowing, are central to maintaining the country’s creditworthiness and attracting further investment in the energy sector.
Experts caution, however, that rising debt levels tied to the oil sector carry risks of revenue volatility, particularly if global oil prices fluctuate or production delays occur. Effective management of oil revenues, transparent allocation, and adherence to sustainable borrowing practices will be critical to ensuring that debt levels do not compromise Uganda’s broader economic stability.
Uganda’s oil sector, concentrated in the Bunyoro region, is poised to become a major driver of growth, but balancing debt accumulation with development priorities will remain a key challenge for policymakers. The Ministry of Finance underscores that ongoing fiscal discipline and strategic planning will ensure that the country’s first oil production delivers economic benefits without triggering unsustainable debt pressures.
