Uganda says to trim debt issuance by 21% in 2026/27 FY

The Bank of Uganda, Uganda’s central bank, in Kampala, Uganda, on Wednesday, May 17, 2023. Uganda estimates that it will need $28.1 billion to adapt to the effects of climate change and cut emissions until the end of the decade. Photographer: Katumba Badru Sultan/Bloomberg via Getty Images

KAMPALA, Dec 18 (Reuters) – Uganda plans to cut its domestic debt issuance by 21.1% in the financial year starting July from the previous period to help trim its ballooning public debt, the finance ministry said in a budget paper seen by Reuters on Thursday.

A total of 9 trillion shillings ($2.53 billion) worth of Treasury bills and bonds will be issued in the 2026/27 (July-June) financial year, compared to 11.4 trillion shillings in the previous year, according to the paper.

“This reduction reflects government’s intention to avoid crowding out of the private sector, curb the rising debt-to-GDP ratio, and address the growing burden of interest payments relative to revenues,” the ministry said in the paper.

Interests payments on Uganda’s public debt are projected to swallow nearly a third of all domestic revenues in the 2026/27 fiscal year, according to the ministry. As a percentage of gross domestic product, public debt rose to 51% in the year to June from 46.8% in the previous period.

“Such elevated debt service burdens shrink fiscal space, leaving fewer resources available for discretionary spending in high-multiplier, growth-enhancing sectors,” the ministry said in the paper.

Uganda’s total public debt stood at $32.3 billion as of June, up 26.2% from the same period 12 months earlier.

Economic growth was projected in the paper to climb to 10.4% in the 2026/27 fiscal year from 6.6% in the previous period.

“This robust growth outlook will be primarily driven by the commencement of oil production, which is expected to generate substantial revenue and stimulate productivity through strong intersectoral linkages,” the paper said.

Uganda plans to start commercial crude oil production from fields in the country’s west in 2026.

($1 = 3,560.0000 Ugandan shillings)