UGANDA: JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS - Moderate risk assessment

Jul 19, 2026

Joint World Bank–IMF debt sustainability analysis for Uganda evaluates the risk of external and overall public debt distress under a baseline scenario, concluding a moderate risk with limited capacity to absorb shocks. The assessment incorporates fiscal consolidation and an improved macro outlook while noting a one-off breach in FY22/23 for the external-debt-service-to-export ratio that does not change the overall conclusion. Stress tests identify potential breaches in external debt burden thresholds and the public debt benchmark, driven by risks such as slower growth, environmental shocks, tighter global financial conditions, reform and oil-export delays, spillovers from the Sudan conflict, and effects on donor financing and tourism.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages25

Reading Time1 h 3 min

Risk assessment

Baseline scenario and medium-term outlook

Stress tests and key risks

Scope and data coverage for debt definitions

Contingent liability tailored stress test

Public Disclosure Pub lic Disc losure Authorized Approved by: Asad Alam and Manuela Francisco (IDA); Catherine Pattillo and Eugenio Cerutti (IMF) . Prepared by the staff of the International Development Association (IDA) and the International Monetary Fund (IMF) . | UGANDA: JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS | | | --- | --- | | Risk of external debt distress | Moderate 1 | | Overall risk of debt distress | Moderate | | Granularity in the risk rating | Limited space to absorb shocks | | Application of judgment | Yes | The economy is recovering from external shocks induced by Russia’s invasion of Ukraine and higher inflation, and the outlook has improved. Given the implementation of fiscal consolidation, Uganda’s public debt continues to be sustainable in the medium term. In line with the previous DSA prepared in March 2022, Uganda has a moderate risk of external and overall public debt distress, with limited space to absorb shocks. Except for a one-off breach of the external-debt-service-to-export ratio in FY22/23, which does not impact the overall debt sustainability assessment, all external PPG debt and total public debt burden trajectories remain below their respective indicative thresholds and benchmarks over the medium term under the baseline scenario. Nevertheless, stress tests highlight breaches of external debt burden thresholds and the public debt benchmark. Specifically, given that a median shock could lead to a breach for the external and total debt service indicators, Uganda has limited space to absorb shocks. Key risks include slower growth, environmental shocks, further tightening of global financial conditions, delayed reform implementation, further delays in oil exports, possible spillovers to trade stemming from the conflict in Sudan and potential repercussions on donor financing and tourism deriving from the recent parliamentary approval of the ‘Anti-Homosexuality Bill 2023’. Going forward, Uganda’s fundamental development 1 Uganda’s Composite Indicator, which is estimated at 2 .91, signals a medium debt-carrying capacity based on the April 2023 WEO and CPIA 2021. challenge is to replace a growth model based on debt-financed public spending that has emphasized infrastructure, with one where the private sector leads economic growth, supported by the state through investments in human capital and targeted regulations to promote green and inclusive growth that reduces inequality and ensures sustainability. The prospects for this shift are positive but will rely on effective implementation of the ECF-supported program to maintain macroeconomic stability, scaled-up investmentsin human capital, better support to the vulnerable, farmers and MSMEs, and more effective use of public resources to maximize returns on investments. 1. Public and publicly guaranteed (PPG) external and domestic debt covers debt contracted and guaranteed by the central government, state and local government, social security fund, and central bank (Text Table 1) . Uganda’s Public Debt Management Framework (2018) gives the Ministry of Finance, Planning and Economic Development the mandate to prepare and publish quarterly Debt Statistical Bulletins. The published data covers PPG debt with information on a residency-based definition of domestic and external debt. In addition, the Bank of Uganda (BoU) provides data on locally issued government debt held by non-residents, which allows a residency-based analysis. However, due to data limitations, debt data does not cover several elements of the general government debt including extra budgetary funds2 and non-guaranteed debt issued by state-owned enterprise (SOE), although SOEs issue debt only in the domestic market. Finally, the contingent liability stress test includes the disputed arrears to Tanzania (US$58 million or 0.1 percent of GDP),3 estimates of non-guaranteed SOE debt (9 .1 percent of GDP) based on a preliminary report by AFRITAC East, the default PPP shock (i.e

FAQs

What is Uganda’s assessed risk of external and overall debt distress?

Uganda is assessed as having a moderate risk of external and overall public debt distress, with limited space to absorb shocks.

Why does the FY22/23 external-debt-service-to-export breach not change the overall assessment?

The breach is described as a one-off event that does not impact the overall debt sustainability conclusion under the baseline assessment.

Which kinds of shocks are highlighted as drivers of threshold breaches in the stress tests?

The stress tests point to breaches from shocks that could raise external and total debt service indicators, including slower growth, environmental shocks, tighter global financial conditions, delays in reforms and oil exports, and spillovers linked to the Sudan conflict and potential impacts on donor financing and tourism.

Jul 19, 2026

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