Uganda is seeking a new concessional lending programme from the International Monetary Fund (IMF) as the government moves to strengthen public finances, increase tax revenue and address mounting fiscal pressures amid rising public debt and currency depreciation.
Finance Minister Henry Musasizi pledged to implement the policy measures required to secure an agreement during talks with IMF African Department Director Zeine Zeidane on October 16, on the sidelines of the IMF–World Bank annual meetings in Bangkok, Thailand, according to new Visionn
The proposed Extended Credit Facility (ECF) programme remains under negotiation, with neither the financing amount nor a timetable for approval announced.
Uganda’s efforts to secure new IMF support come as authorities face growing pressure to narrow the budget deficit, improve domestic revenue collection and contain borrowing costs. The IMF has warned that the country’s fiscal deficit could widen to 7.1% of gross domestic product (GDP) in the 2025/26 financial year, while public debt is projected to reach 55.1% of GDP.
The Fund has urged the government to strengthen revenue mobilisation and exercise greater spending discipline to reduce fiscal vulnerabilities and limit the impact of government borrowing on credit available to the private sector.
Uganda’s previous three-year ECF arrangement, approved in June 2021 for approximately $1 billion, expired in June 2024 without completion of its final review. The IMF had disbursed about $870 million under the programme by March 2024.
Discussions on a successor arrangement began in 2025. In August, IMF Resident Representative Sébastien Walker indicated that further progress was needed before an agreement could be reached, with IMF staff planning a programme negotiation mission for September.
The latest discussions signal the government’s continued interest in securing concessional financing to support economic management and strengthen fiscal stability. However, the final terms and size of any new programme remain uncertain.
A central element of the government’s fiscal strategy is to increase tax collection and reduce reliance on borrowing to finance public expenditure.
Finance Ministry Permanent Secretary Ramathan Ggoobi said Uganda aims to raise its tax-to-GDP ratio from 14.3% in the 2025/26 financial year to at least 20% by 2029/30. Proposed revenue-raising measures are expected to be incorporated into the 2027/28 budget framework.
Achieving the target would require a substantial increase in domestic revenue mobilisation over the coming years, potentially involving changes to tax policy and improvements in revenue administration.
The government faces the challenge of raising additional revenue while managing the economic effects of higher taxes and maintaining conditions that support private-sector activity.
Currency instability has added to these pressures. The Bank of Uganda raised its benchmark interest rate by 225 basis points to 12% at a special policy meeting in October, following sustained pressure on the Ugandan shilling.
The currency had lost approximately 12% of its value against the US dollar since the beginning of 2026, increasing concerns about imported inflation and the cost of servicing foreign-currency obligations.
The central bank also raised its forecast for 12-month inflation to between 7% and 7.5%, citing higher international energy prices and currency depreciation.
Bank of Uganda Governor Michael Atingi-Ego participated in the October 16 discussions with the IMF, highlighting the importance of monetary and fiscal policy coordination as the country seeks to stabilise its economy.
Higher interest rates may help ease pressure on the currency and contain inflation, but they can also increase borrowing costs for businesses and households. Combined with government financing needs, tighter monetary conditions could weigh on private investment and credit growth.
Uganda’s creditworthiness also remains constrained by fiscal risks. Fitch Ratings affirmed the country’s sovereign credit rating at B with a Stable Outlook in August, citing rising public debt, persistent budget deficits and high interest costs.
The pursuit of a new IMF programme therefore comes at a critical time for Uganda’s economic management. An agreement could provide access to concessional financing and support policy reforms, while also helping strengthen confidence among international lenders and investors.
