Uganda's External Debt Peaks As Dollar-Denominated Obligations Tighten Fiscal Space

17 March 2026
Nile Post (Kampala)
By Shamim Nabakooza

Uganda's external debt landscape is under renewed scrutiny following the release of the latest Quarterly Debt Statistical Bulletin by the Ministry of Finance, Planning and Economic Development, which shows a significant concentration of liabilities in US Dollars and a sharp rise in debt servicing costs.

As of December 2025, the US Dollar remains the primary currency for the nation's foreign obligations, accounting for 46% of the total external debt stock, valued at $7.28 billion.

This is followed by the Euro at 35% ($5.53 billion), while the Chinese Yuan accounts for 8% and the Japanese Yen 6%.

The heavy reliance on the dollar comes at a time when repayment pressures are mounting. The Ministry reported that total external debt service rose to $416.62 million (Shs1.563 trillion) in the second quarter of the 2025/26 financial year, up from $381.52 million in the previous quarter.

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Officials attributed the increase to a spike in principal repayments and administrative fees, noting that the increment reflects higher outflows during the period as maturing obligations begin to weigh on the national budget.

Beyond direct sovereign borrowing, the report also highlights the government's exposure through guaranteed loans. The State currently backs 11 loans acquired by the Uganda Development Bank and the Islamic University in Uganda, with a total guaranteed sum of $130.1 million.

The Ministry indicated that the outstanding balance on these guarantees grew by 4.7% between September and December 2025, with only 58.7% of the guaranteed amount drawn down and outstanding by the end of the period.

The increase was largely driven by a new disbursement of about $5.15 million from the European Investment Bank, which had no outstanding balance in September 2025.

According to the Ministry, this new inflow outweighed scheduled repayments by other creditors, meaning that without it, the overall guaranteed debt stock would have declined.

As Uganda navigates rising debt servicing costs, the dominance of the dollar in its external portfolio remains a key vulnerability.

Currency fluctuations, particularly a stronger dollar, could further escalate repayment burdens and strain fiscal planning as the government balances debt obligations with development priorities.

Read the original article on Nile Post.

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