Uganda is actively seeking a new concessional lending agreement with the International Monetary Fund (IMF) to alleviate mounting public debt, currency depreciation, and rising domestic borrowing costs that are placing heavy pressures on government finances.
Finance State Minister Henry Musasizi outlined the government’s commitment to vital economic reforms during meetings with IMF officials in Bangkok, Thailand, on October 16, 2026. The high-level talks aim to improve investor confidence, anchor policy credibility, and secure affordable financing to navigate tightening global and domestic economic conditions.
Details of the Proposed Extended Credit Facility
The proposed Extended Credit Facility (ECF) remains under active negotiation, with specific financing amounts and official approval dates yet to be finalized. According to reports from the Monitor and IntelliNews, Ugandan authorities have stated their readiness to implement necessary prior actions required by the Fund.
Key areas of focus during the discussions in Bangkok included:
- Fiscal consolidation and structural budget controls
- Stronger domestic revenue mobilization and tax policy reforms
- Tighter spending controls and reduced supplementary budgets
- Monetary policy adjustments to manage currency stability
The discussions were held between Ugandan officials-including Permanent Secretary and Secretary to the Treasury Ramathan Ggoobi and Bank of Uganda Governor Michael Atingi-Ego-and the IMF’s Director for Africa, Zeine Zeidane.
Background on Previous IMF Engagement
Uganda’s previous three-year ECF arrangement, which was approved in June 2021 for approximately $1 billion, expired in June 2024 without the completion of its final review. By March 2024, the IMF had disbursed about $870 million under that program. Discussions for a successor program began in 2025 as the country faced the expiration of its active Fund-backed reform anchor.
Securing a new ECF program is viewed as critical because it often serves as a catalyst for other multilateral lenders, such as the World Bank and the African Development Bank, which frequently tie their budget support to an active IMF framework.
Economic Pressures Facing Uganda
The push for external concessional funding comes as Uganda grapples with significant macroeconomic challenges:
- Public Debt: National public debt has climbed past Shs107 trillion, with interest payments consuming more than a third of domestic revenue.
- Currency Volatility: The Ugandan shilling has experienced downward pressure, prompting the Bank of Uganda to adjust monetary stances and raise the Central Bank Rate to 12 percent.
- Tax-to-GDP Ratios: The IMF has consistently pointed out that Uganda collects too little revenue to sustainably fund development needs, driving up reliance on expensive domestic borrowing. Dr. Ggoobi noted the government’s target to raise the tax-to-GDP ratio from 14 percent to at least 20 percent by incorporating new measures into the upcoming Budget Framework Paper.
As negotiations continue, the primary objective for Kampala is to calm financial markets, stabilize the exchange rate, and secure cheaper external financing to support the national budget without placing undue squeeze on the domestic private sector.
