Parliament’s Budget Committee has raised concerns over Uganda’s fiscal position after the country’s total public debt rose to Shs118 trillion by the end of FY2024/25, pushing the debt-to-GDP ratio to 51.8%, above the 50% ceiling provided for under the Charter of Fiscal Responsibility.
The concerns are contained in the Committee report on the National Budget Framework Paper (NBFP) for FY2026/27–2030/31, which Parliament approved last Thursday, with Deputy Speaker Thomas Tayebwa presiding.
Remigio Achia (Pian County), the Vice Chairperson of Parliament’s Budget Committee, presented the report to the House, outlining key fiscal developments, debt trends and risks emerging over the medium term.
According to the report, Uganda’s public debt increased by 14.6%, rising from Shs103 trillion in FY2023/24 to Shs118 trillion in FY2024/25. Of this amount, domestic debt stands at Shs62.2 trillion, accounting for 52.7% of the total stock, while external debt amounts to Shs55.9 trillion, representing 47.3%.
The Committee notes that domestic debt has grown more rapidly than external debt, increasing by 27% within one year, largely due to financing fiscal deficits through the issuance of government securities.
Rising interest costs
The report further shows that interest payments are projected to rise from Shs11.33 trillion in FY2025/26 to Shs12.73 trillion in FY2026/27, an increase of 12.4%.
Of the projected interest costs, Shs10.72 trillion is earmarked for domestic interest payments, while Shs2.02 trillion will be spent on external interest and commitment fees.
The Committee notes that interest payments currently consume 28.1% of tax revenue, a level that exceeds benchmarks set under the Charter of Fiscal Responsibility.
Domestic arrears persist
Parliament also flagged the continued challenge of domestic arrears, despite a reduction in the outstanding stock.
Citing the Auditor General’s December 2025 report, the Committee notes that domestic arrears declined from Shs13.8 trillion to Shs8.4 trillion by the end of FY2024/25.
However, the Committee observes that allocations for clearing arrears remain below levels recommended under existing policy frameworks.
The NBFP proposes an annual allocation of Shs200 billion starting in FY2026/27, which compares to the Shs450 billion recommended under the Domestic Arrears Strategy and the Public Debt Management Framework (PDMF) 2023.
Fiscal deficit and financing
The report shows that government recorded a fiscal deficit of Shs13.3 trillion in FY2024/25, exceeding the target of Shs12.7 trillion.
Due to constrained access to concessional external financing, about 90% of the deficit was financed domestically, mainly through government securities.
Fiscal rules under pressure
The Committee further observes that Uganda has breached some fiscal benchmarks under the current Charter of Fiscal Responsibility, including the 50% debt-to-GDP ceiling and limits on domestic interest payments as a share of revenue.
The current Charter expires in June 2026, and the report notes that a new Charter for FY2026/27–2030/31 is under development.
Minister’s remarks
Responding after Parliament approved the NBFP, the Minister of Finance (General Duties), Henry Musasizi, said government expects the economy to maintain strong momentum in the coming financial year, building on recent growth performance.
Musasizi told Parliament that the Ministry of Finance will work within timelines set out in the Public Finance Management Act to ensure that the budget for FY2026/27 is processed by end of April 2026, ahead of the inauguration of the 12th Parliament.
He said government will focus in the next financial year on improving budget credibility, strengthening cash and liquidity management, closing expenditure leakages, and enhancing public financial management systems.
On domestic arrears, Musasizi reiterated government’s commitment to clearing the existing stock and preventing the accumulation of new arrears, alongside efforts to improve project execution and absorption of borrowed funds.
