Uganda has officially announced plans to secure a €207.7 million ($242.55 million) loan from Citibank to overhaul key transport infrastructure in its eastern region, highlighting the nation’s ongoing drive to modernize infrastructure despite growing alarm over its public debt trajectory.
State Minister for Finance Henry Musasizi presented the borrowing proposal to parliament’s national economy committee, outlining that the funds will support the rehabilitation and upgrading of 137 kilometers of roads. The primary project focuses on the strategic 127-kilometer Jinja-Mbulamuti-Kamuli-Bukungu corridor, alongside 10 kilometers of urban roads in Jinja City. Serving as an essential economic artery for the Busoga sub-region, the improved network aims to facilitate regional trade, streamline travel, and offer a reliable alternative transit link between northern and southern Uganda.
Musasizi defended the venture’s financial feasibility, citing an estimated Economic Internal Rate of Return (EIRR) of 16.7%—substantially exceeding the country’s 11% economic opportunity cost of capital. Allocation details specify that €179.26 million will cover civil works and commercial insurance, while the remaining €28.51 million is earmarked for construction supervision and land acquisition.
However, the acquisition of commercial credit intensifies pressure on Uganda’s escalating debt profile, which has drawn repeated warnings from economic authorities. Bank of Uganda has previously cautioned that soaring debt service costs are swallowing a massive share of domestic revenue, squeezing out vital budgetary allocations for essential public service sectors like health and education.
International institutions echo these anxieties. In its recent Article IV Consultation report, the International Monetary Fund (IMF) forecasted Uganda’s debt-to-GDP ratio to reach 55.5% in the current fiscal year before climbing toward nearly 60% by the 2030/31 fiscal period. The IMF stressed that the nation faces an increasingly severe debt service burden. Concurrently, Fitch Ratings affirmed Uganda’s sovereign credit rating at “B” with a stable outlook, noting explicitly that high interest obligations and public debt expansion significantly constrain the country’s economic assessment.
The Citibank road request arrives while Kampala actively seeks to secure a far larger €2.7 billion financing package for the Kampala-Malaba Standard Gauge Railway (SGR). To mitigate fiscal strain from such immense commitments, Ugandan officials are attempting to diversify SGR funding by tapping export credit agencies, development finance institutions, and issuing a planned sovereign sukuk. Citibank is acting as the financial arranger for the rail venture, with the government aiming to reach a final financial close by November 2026.
