Uganda Cuts External Borrowing by 98%

The Ugandan government has announced a drastic 98% cut in external borrowing for the financial year 2025-26, as part of measures to address rising public debt, which has escalated to $25.6 billion, accounting for 52% of GDP. In addition to slashing external borrowing, overall government spending will be reduced by over 20%, and domestic borrowing through Treasury bonds will be cut by 54%. This decision comes amid fears of a potential debt crisis, exacerbated by stagnant tax revenues and high interest payments on existing loans. The government maintains that previous borrowing has contributed to economic growth, although this claim is met with skepticism due to recent credit rating downgrades. Finance Ministry officials emphasize ongoing efforts to manage the debt without hindering economic development, as Uganda's economy has reportedly grown to around $53 billion, attracting foreign investment. However, the situation remains precarious, with concerns from both economists and opposition politicians regarding the sustainability of the country's fiscal policies.