Advertisement
Earlier this week, Uganda disclosed plans to borrow about USD 2.34 billion from multiple lenders, including the World Bank, Standard Chartered, and Citi, to fund crucial infrastructure projects. The financing will primarily support the construction of electricity transmission lines and roads in the oil-rich Albertine region. This large-scale borrowing aims to boost the country's energy and transport capacity but has triggered fresh debate over Uganda's rising public debt and its implications for economic stability and social spending.
The Ugandan government has outlined a comprehensive proposal to secure approximately USD 2.34 billion in external financing to accelerate infrastructure development across key sectors. According to parliamentary documents reviewed by Reuters, the plan allocates USD 1.34 billion to be borrowed from the World Bank, while the remainder will be sourced from Standard Chartered and Citi. The funds are intended to support the construction of major infrastructure projects, including a new electricity transmission line and a network of roads connecting the Albertine region - an area of strategic importance where Uganda is developing its oil reserves. Advertisement
Officials stated that the proposed borrowing aligns with Uganda's broader national development agenda, which prioritises transport connectivity, energy access, and industrialisation. However, the plan has sparked concerns among economists, opposition members, and the central bank. Critics argued that the country's growing appetite for debt could lead to long-term fiscal strain, warning that rising debt-servicing obligations may divert resources away from essential social services such as healthcare and education.
Uganda's public debt has surged in recent years, growing by 26.2 per cent to USD 32.3 billion during the 2024-25 financial year. This increase was primarily attributed to a rise in domestic borrowing and the government's continued investment in large-scale infrastructure projects. Analysts observed that the country's debt ratio is approaching levels that could constrain future fiscal flexibility. Meanwhile, the World Bank resumed its funding earlier this year after temporarily suspending lending in response to Uganda's controversial anti-LGBT law, adding a layer of geopolitical sensitivity to the renewed partnership.
Uganda's fresh borrowing initiative reflects its determination to strengthen infrastructure and stimulate economic growth, particularly in the oil-rich Albertine corridor. Yet the move also highlights the persistent tension between development ambitions and fiscal sustainability. While enhanced energy and transport networks could attract further investment and foster regional trade, the government faces growing pressure to manage its debt prudently. Ensuring transparency in loan utilisation and prioritising high-impact projects will be crucial in balancing Uganda's infrastructure aspirations with the need to safeguard its long-term financial stability.
Source: Reuters
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
