Uganda Initiates Talks with IMF for Fresh Credit Facility Amid Rising Debt

As the country’s public debt swells, Kampala seeks a new Extended Credit Facility to stabilize its economy ahead of next year’s elections.

Kampala, Uganda
Uganda is negotiating a new round of funding with the International Monetary Fund (IMF) under its Extended Credit Facility (ECF), according to the Ministry of Finance. The previous $1 billion ECF program, initiated in 2021, expired in 2024 with only about $870 million disbursed.

Ramathan Ggoobi, permanent secretary at the Ministry of Finance, said the proposal for a renewed facility will likely be submitted to the IMF Board after Uganda’s general elections, expected in early 2026.

The discussions come against a backdrop of mounting public debt, which rose 17.8% in 2024 to $29.1 billion — equivalent to 52.1% of GDP. The government is under pressure to secure affordable external financing to manage its debt burden and support economic stability.

Why It Matters:

Debt sustainability risk: Without favorable financing, Uganda’s debt could become unmanageable, threatening macroeconomic stability.

Pre-election economic gamble: The timing—just before elections—means financial decisions may significantly influence political dynamics.

Investor confidence: A renewed IMF deal could boost investor sentiment, but failure could deter potential backers.

Conditionality concerns: Past IMF programs often come with policy conditions (e.g., fiscal reforms) that may impact public spending or social programs.

What to Watch:

Whether the IMF Board approves the new ECF program and on what terms.

How Uganda’s government balances IMF conditions with political promises ahead of elections.

Reactions from international investors — will foreign capital increase or shy away?

Domestic fiscal measures: Will the government implement austerity, tax reforms, or spending cuts to align with IMF conditions?