Uganda has secured a new $2 billion concessional financing package from the World Bank, marking the restoration of a critical development partnership after nearly two years of suspended lending.
The new concessional funding spread over the next three years is a fresh injection that will sit alongside an existing portfolio worth 4.9 billion.
The new tranche of funding is designed to support roads, electricity transmission, and last-mile distribution, regional city infrastructure, schools, information technology, agriculture, water and irrigation, an export guarantee scheme, skills development, and social protection programs.
The disclosure, made by Permanent Secretary to the Treasury Ramathan Ggoobi after the 2025 IMF–World Bank Annual Meetings in Washington, signals a significant rapprochement between Kampala and its largest multilateral financier.
At face value, the commitment calms market nerves: the World Bank is a stable, concessional lender whose projects are wired into Uganda’s development plans.
More politically, it marks the end of a pause in new lending that followed a high-profile suspension in 2023; the Bank resumed project approvals earlier this year after Kampala satisfied conditions aimed at mitigating social harms tied to controversial legislation.
Debt sustainability
But the new inflow arrives at a delicate fiscal moment. Uganda’s public debt surged to Shs 116.2 trillion ($32.3 billion) as of June 2025, representing a sharp rise by 26.2% from the Shs 89.5 trillion ($25.6 billion) recorded a year earlier, according to the Ministry of Finance Annual Debt Statistical Bulletin and Public Debt Portfolio Analysis.
External debt stood at Shs 55.9 trillion ($15.5 billion), while domestic debt rose to Shs 60.3 trillion ($16.8 trillion).
The debt-to-GDP ratio rose to about 51.3 percent, amplifying concerns about debt servicing costs, crowding out of private credit, and bank exposure to sovereign paper.
That upward trajectory makes fresh borrowing, even on concessional terms, a matter that demands tight planning and clear prioritization.
The World Bank’s approach under President Ajay Banga is explicitly built around catalysing private-sector job creation rather than acting purely as a balance-sheet financier.
Banga’s public remarks at the 2025 Annual Meetings emphasised scaling private investment and creating “patient capital” structures, a pivot embodied by the International Finance Corporation (IFC), the Bank Group’s private-sector arm, which Uganda says will co-invest in minerals, renewables, and agro-industrialisation projects and provide long-term capital for state-owned enterprise reform.
The restoration of World Bank lending follows a nearly two-year suspension prompted by international concerns in 2023.
The Bank halted new operations amid controversy over Uganda’s Anti-Homosexuality Act. However, its re-engagement in mid-2025 came after Uganda put in place mitigation measures the Bank judged sufficient to reduce potential harms to vulnerable populations.
The marked increase in domestic borrowing is a trend the IMF and other institutions have warned can crowd out private credit and raise interest burdens for the government as local yields climb.
The IMF’s recent regional commentary also flagged the risks of heavy domestic borrowing across sub-Saharan Africa, noting potential banking sector vulnerabilities where government paper dominates bank balance sheets.
For Uganda, higher interest rates and a significant domestic share of debt create a fiscal fragility that must be managed through stronger revenue mobilisation and careful liability sequencing.

Uganda appears to recognise this trade-off. Mr. Ggoobi publicly confirmed that Uganda is advancing negotiations with the International Monetary Fund (IMF) for a prospective Extended Credit Facility (ECF) after national elections.
The ECF would support reforms aimed at boosting domestic revenue collection, tightening budget discipline, and strengthening financial sector resilience.
But caution is warranted. Past large infrastructure programmes in Uganda have suffered from cost overruns, weak maintenance planning, and slower revenue returns.
Without robust procurement, stronger public investment management, and a sharper focus on operations and maintenance, new assets risk becoming fiscal drains rather than growth multipliers.
External partners will watch closely whether the projects deliver measurable increases in productivity and jobs.