Keypoints:
- Uganda plans to borrow $608m from foreign lenders
- Public debt has climbed to $32.3bn in a year
- Lawmakers to scrutinise loans amid fiscal strain
UGANDA’S government is planning to borrow $608 million from foreign lenders, including South Africa’s Rand Merchant Bank (RMB) and the Korea Export-Import Bank, to finance infrastructure development, according to a parliamentary document seen by Reuters.
The proposed borrowing comes at a time of heightened concern over Uganda’s rising public debt, with opposition politicians, economists and the central bank warning that mounting debt servicing costs are increasingly crowding out spending on essential social services.
According to the document, the government intends to source $448 million of the total amount from RMB, with the remaining balance expected from the Korea Export-Import Bank. Lawmakers were due to be asked to approve the credit lines, although the document does not specify which infrastructure projects would be financed through the new loans.
Uganda’s finance ministry has consistently argued that infrastructure investment is critical to sustaining economic growth, boosting regional trade and preparing the ground for future oil production. However, the scale and pace of new borrowing have intensified debate about whether the country’s fiscal position can absorb additional debt.
Rising debt sharpens political scrutiny
Total public debt rose to $32.3bn in the 12 months to June, an increase of 26.2 percent compared with the previous year, according to finance ministry data cited by Reuters. The sharp rise has amplified political scrutiny and public debate over the sustainability of government borrowing.
Uganda’s central bank has repeatedly cautioned that high debt servicing obligations are diverting resources away from priority sectors such as healthcare, education and social protection. Interest payments now consume a growing share of government revenue, limiting the state’s ability to respond to economic shocks or rising social needs.
Opposition lawmakers have voiced concern about the lack of detailed information accompanying new loan requests, particularly where project timelines, economic returns and repayment terms are not clearly outlined. They argue that without stronger transparency and oversight, additional borrowing risks deepening Uganda’s fiscal vulnerabilities.
Infrastructure ambitions meet fiscal pressure
The government maintains that infrastructure development remains non-negotiable, pointing to persistent gaps in transport networks, energy supply and logistics corridors. Officials argue that external financing allows Uganda to spread the cost of long-term investments while accelerating development outcomes that domestic revenues alone cannot support.
Analysts note, however, that Uganda’s situation reflects a wider regional challenge. Many African economies are grappling with higher borrowing costs as global interest rates remain elevated, making external debt more expensive to service. Currency pressures have also increased the local cost of repaying dollar-denominated loans.
Uganda’s ambition to become a crude oil producer is frequently cited as a future source of revenue that could ease fiscal pressures. Yet repeated delays to the start of oil production, coupled with uncertainty in global energy markets, have made analysts cautious about relying on projected oil income to justify further borrowing in the near term.
Lawmakers weigh economic trade-offs
Parliamentary debate on the proposed loans is expected to focus on balancing development needs against fiscal discipline. Some lawmakers have called for stricter conditions on borrowing, including clearer links between loans and measurable economic returns.
As reported by Reuters, the government has yet to provide detailed information on the specific infrastructure projects tied to the proposed credit lines. The outcome of the parliamentary process will be closely watched by investors, development partners and rating agencies assessing Uganda’s fiscal trajectory.
For Uganda, the planned $608 million borrowing underscores the difficult trade-offs facing policymakers as they seek to finance growth while managing an increasingly heavy debt burden.
