Uganda has confirmed that it is negotiating a new funding programme with the International Monetary Fund (IMF) as the country looks to stabilise public finances and manage rising debt. Officials said the new Extended Credit Facility (ECF) will be submitted to the IMF Executive Board after the general elections expected in early 2026.
Previous programme expired
The last ECF, worth $1 billion, was agreed in 2021 but expired in 2024 after only $870 million had been disbursed. Implementation delays and external financing challenges meant the programme fell short of its target. Despite this, it provided critical budgetary support at a time when Uganda was grappling with the pandemic recovery and tighter global financial conditions.
Timing influenced by elections
Ramathan Ggoobi, permanent secretary at the Ministry of Finance and secretary to the Treasury, confirmed that the government intends to present the new programme after the elections scheduled for January or February 2026. Authorities believe this sequencing is necessary to preserve credibility, ensuring the negotiations are not perceived as being tied to electoral politics.
Debt burden intensifies
Uganda’s public debt rose by 17.8% in 2024 to reach $29.1 billion, pushing the debt-to-GDP ratio to 52.1% from 49.9% the previous year. Economists warn that without concessional funding from the IMF, Uganda may be forced to turn to more expensive commercial borrowing, which would further strain its fiscal position and divert resources from key social and infrastructure projects.
Advantages of IMF support
A new ECF arrangement would provide access to cheaper credit and signal commitment to fiscal discipline. It would also reassure donors and international investors, potentially unlocking further external support. At a time when global interest rates remain elevated, concessional financing is seen as essential for safeguarding debt sustainability and maintaining investor confidence.
Risks of delay
Failure to conclude negotiations in a timely manner could increase borrowing costs and undermine the stability of the Ugandan shilling. Development partners may also hold back on funding commitments without the backing of an IMF programme. With elections approaching, markets are closely monitoring fiscal signals, making the outcome of the talks even more significant.
Balancing reforms with political pressure
The IMF is expected to require reforms focused on governance, debt management, and fiscal transparency. While these measures are necessary for long-term stability, they may prove politically challenging in an election year when public spending pressures are rising. The government faces the delicate task of honouring reform commitments while navigating domestic political realities.
Outlook for the economy
The negotiations underscore Uganda’s reliance on external support to maintain fiscal stability. A successful IMF agreement would provide critical breathing space, reinforcing reforms and helping to sustain growth in the medium term. Conversely, delays or failure to reach a deal could leave Uganda exposed to debt risks and weaken investor sentiment ahead of the 2026 elections.
REFH – Newshub, 3 September 2025
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