Uganda's government has transferred 1.8 trillion shillings to the Bank of Uganda as part of efforts to reduce domestic debt obligations amid growing fiscal strain. Public debt has climbed to 96 trillion shillings from 88 trillion shillings one year earlier, driven by infrastructure spending and debt service requirements. The central bank held its policy rate at 9.75 percent to control inflation and maintain economic stability, though officials warned that continued domestic borrowing may restrict budget flexibility.
The economy grew 6.3 percent in the 2024-25 fiscal year, led by agriculture and industrial output. The Bank of Uganda expects growth of 6.0-6.5 percent for 2025-26, supported by oil investments and infrastructure programs. Inflation remained stable at 3.5 to 4.0 percent through August 2025, well within targets. Authorities project inflation will stay below 5 percent in the coming months.
Global financial pressures and geopolitical tensions pose risks to Uganda's fiscal position. A new U.S. law taking effect in January 2026 will impose a 1 percent tax on remittances, potentially reducing foreign exchange inflows. Debt service now consumes nearly 30 percent of domestic revenue, limiting funds for development projects.
The economy grew 6.3 percent in the 2024-25 fiscal year, led by agriculture and industrial output. The Bank of Uganda expects growth of 6.0-6.5 percent for 2025-26, supported by oil investments and infrastructure programs. Inflation remained stable at 3.5 to 4.0 percent through August 2025, well within targets. Authorities project inflation will stay below 5 percent in the coming months.
Global financial pressures and geopolitical tensions pose risks to Uganda's fiscal position. A new U.S. law taking effect in January 2026 will impose a 1 percent tax on remittances, potentially reducing foreign exchange inflows. Debt service now consumes nearly 30 percent of domestic revenue, limiting funds for development projects.
