The IMF notes that real gross domestic product (GDP) growth rose to 6.3% in the 2024/25 financial year, supported by strong domestic demand, favourable external conditions and robust coffee exports. Inflation remained below 4%, helped by a tight monetary policy stance, a stronger Ugandan shilling and easing global food and fuel prices. Foreign exchange reserves also increased significantly in 2025, reaching more than three months of import cover, reflecting strong portfolio inflows and export performance.
Despite the positive outlook, the Fund cautions that Uganda’s fiscal position has weakened. The overall budget deficit widened to 6% of GDP in 2024/25, up from 4.7% the previous year, while public debt rose to 52.4% of GDP. Rising interest payments and growing reliance on domestic borrowing have increased debt-servicing pressures, limiting fiscal space and raising risks to long-term sustainability.
The IMF assesses Uganda’s capacity to repay its obligations as adequate, but subject to risks. These include potential portfolio outflows, commodity price shocks and delays in the country’s oil project. Oil production is expected to begin in late 2026 and could provide a significant boost to growth, exports and government revenues, but the Fund warns that delays would undermine medium-term projections.
To safeguard macroeconomic stability, the IMF urges Uganda to accelerate fiscal consolidation through durable revenue-mobilisation measures and tighter control of current spending. It highlights the importance of streamlining tax exemptions, improving budget discipline and strengthening public financial management systems.
On monetary policy, the Fund supports the Bank of Uganda’s data-driven and forward-looking approach. While the current tight stance is appropriate to anchor inflation expectations, a gradual easing could be considered if inflation risks continue to subside, helping to support private sector credit growth.
The IMF also emphasises the need for strong governance and a credible oil-revenue management framework to ensure that future oil income supports inclusive and sustainable development.
–IMF/ChannelAfrica–
