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Lender’s decision is expected early next year
Kampala, Uganda | AGENCIES | Uganda is negotiating a new funding programme with the International Monetary Fund (IMF) after the expiry of its previous $1 billion facility last year, as the East African nation faces mounting debt and rising financing costs.
Ramathan Ggoobi, the Finance Ministry’s top technocrat, confirmed the talks during a meeting with ambassadors in Kampala recently.
“Uganda is currently negotiating a new Extended Credit Facility Program with the IMF,” said Ggoobi, who also serves as permanent secretary and secretary to the Treasury.
Debt strain mounts
The previous three-year programme, approved in 2021, expired in September 2024 with $870 million disbursed.
At the time, the IMF said the facility lapsed “against the backdrop of program implementation challenges compounded by external funding constraints.”
The government is now under pressure to secure fresh concessional loans to ease the burden of rising debt.
Uganda’s public debt rose by 17.8% in 2024 to $29.1 billion, pushing the debt-to-GDP ratio to 52.1% from 49.9% a year earlier, according to finance ministry data.
With limited access to external financing, Kampala leaned heavily on the domestic market, raising interest costs and crowding out private sector credit.
Local borrowing and debt refinancing account for roughly $5.8 billion, or one-third, of the 2025/26 budget.
The government is expected to spend $2.8 billion on domestic interest payments this year, compared to just $450.7 million for external debt.
IMF decision expected in 2026
The new facility is expected to be submitted to the IMF board after Uganda’s general elections in early 2026.
“The program is expected to be presented to the IMF Board after the general elections early next year,” Ggoobi said to diplomats. The Electoral Commission has yet to fix the exact election date, though it is due in January or February.
Analysts say the delay reflects both political timing and the IMF’s emphasis on credible fiscal reforms.
A successful programme could ease funding constraints and support investor confidence, but failure may deepen reliance on costly domestic borrowing.
World Bank resumes funding
The push for IMF support comes as Uganda also turns to the World Bank for development financing.
The Washington-based lender resumed funding in June after a two-year freeze linked to Uganda’s controversial anti-LGBT law, which drew international criticism for its severe penalties.
Ggoobi noted that disbursements have commenced. “Our relationship with the World Bank is now fully restored,” he said.
“We have presented new projects to the Board. The Bank has allocated more concessional financing for a number of transformative projects.”
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Source: Financeafrica.com
