Uganda has announced plans to cut its domestic borrowing by 21 per cent in the 2026/27 financial year as the government tries to reduce the rising cost of debt and ease pressure on public finances.
According to a budget paper from the Ministry of Finance, the government will reduce the issuance of Treasury bills and bonds to USh9 trillion (about Sh326 billion), down from USh11.4 trillion (Sh412 billion) in the previous financial year. The move is aimed at controlling borrowing costs and slowing the growth of public debt.
The government said the decision will also help prevent crowding out the private sector, where heavy government borrowing limits access to credit for businesses. In addition, it hopes to reduce the debt-to-GDP ratio and lower the growing interest payments that are taking up a large share of government revenue. Interest payments are expected to consume nearly one-third of all domestic revenues in the 2026/27 financial year.
Uganda’s public debt has continued to rise, reaching 51 per cent of GDP by the end of June, up from 46.8 per cent a year earlier. Total public debt stood at $32.3 billion (about Sh4.16 trillion), representing a 26.2 per cent increase compared to the previous year.
Despite the heavy debt burden, the government remains optimistic about the country’s economic outlook. The Finance Ministry projects economic growth of 10.4 per cent in the 2026/27 financial year, up from 6.6 per cent last year. This growth is expected to be driven largely by the start of commercial oil production in western Uganda in 2026, which is projected to generate new revenue and boost productivity across key sectors of the economy.
Uganda’s export sector is also showing strong performance. In October, export earnings nearly doubled compared to the same month last year, rising to $1.5 billion (about Sh193 billion). The increase was driven mainly by higher earnings from coffee, cocoa, and gold.
As Africa’s largest coffee exporter, Uganda has benefited from high global coffee prices. Gold exports also recorded a sharp rise, with earnings more than tripling to $964.6 million (Sh124 billion), according to data from the Bank of Uganda.
Overall, the government hopes that reduced domestic borrowing, combined with stronger exports and oil production, will help stabilise the economy and create more room for growth and development in the coming years.
