Dr. Michael Atingi-Ego, Governor of Bank of UgandaBy Prisca WanyenyaBank of Uganda has revealed that Uganda’s public debt is likely to rise to Shs158 trillion by July 2027 if government secures all domestic and external loans earmarked to fund the 2026/27 National Budget.The debt would rise from the projected Shs137.2 trillion as of July 2026.The revelation was made by Dr. Michael Atingi-Ego, Governor of Bank of Uganda, while appearing before Parliament’s Budget Committee on September 21, 2026, to submit views on the proposed Charter of Fiscal Responsibility.Atingi-Ego warned that although Uganda’s debt remains sustainable, it is sensitive to exchange rate depreciation, higher domestic interest rates, and a weak external environment including debt service costs, weakened reserve accumulation, and complicated inflation management.“The public debt as of July 2026 was about Shs137.2 trillion at face value. If the net domestic financing of Shs12.2 trillion and external financing of about Shs9.2 trillion is included, the total public debt should rise to about Shs158 trillion, which is about 57.7% of the nominal GDP, which is substantially higher than the level given in the charter,” said Atingi-Ego.“If the base is inconsistent, the entire path could become unattainable. So, this is something that I think we need to reconcile with the Minister of Finance and find out exactly what the difference is,” he added.Do Your Job!The Central Bank’s warning prompted Richard Sebamala (Bukoto Central) to ask whether the loans government is borrowing are correct. The Governor asked MPs to do their job of thoroughly scrutinising the loans instead of asking him to determine their correctness.“Parliament, it is you who appropriates the borrowing, you know what is being borrowed. For us, we just execute. So, asking me whether the borrowing is correct, I will throw back the question to you. What did you pass? Did you pass the correct borrowing? Why are you asking me? So please do your job,” Atingi-Ego said.Domestic Arrears Crippling BanksThe Central Bank also urged Parliament to verify the current stock of domestic arrears and include them in the national budget before approving the Charter of Fiscal Responsibility, saying government’s delays to pay contractors and suppliers have crippled businesses and affected commercial banks forced to write off non-performing loans.“Banks are having challenges, they have lent money to government suppliers, but sometimes government delays to pay, and also delays to pay the banking sector, and that creates what we call non-performing loans, and because of our regulations, we ask them to begin providing for some of these loans after a particular period, and that is very expensive,” Atingi-Ego noted.“In part, they contribute to higher lending rates in the economy. So that is why we are saying that the quicker we fix these arrears, the better for the government fiscal numbers, the better for the banking sector, and the better for the entire economy,” he added.Charter Credible But…While presenting the Central Bank’s position, Atingi-Ego described the Charter as broadly credible as it provides a fiscal consolidation path, provided the path is maintained and key fiscal risks are transparently monitored.He called for annual monitoring of risks to make the charter more realistic.“So, what we are proposing is that the charter could require annual reporting on domestic financing strategy, including the performance, yield development, market structure, banking sector. So that we assess that is our original thinking are the same and what has changed? And if something has changed, what do we need to do to the path in the charter so that we are all on board with it,” he said.“We also do sensitive analysis to see how the risks are evolving and then we see how it calls for remission in some of the targets in the charter.”Why Last Charter FailedSebamala tasked Bank of Uganda to give assurances that the Charter will be followed this time, yet past charters were not fully implemented.“What led to the failure of achieving the last charter that in this particular charter will not have the same problems the last charter faced? Can you give us assurance that Uganda can implement the proposed expenditure programme? Service its debt, maintain price, exchange rates, be stable, private sector, access to credit, and withstand oil revenue delay, because the oil assumption can go on till around 2028,” Sebamala asked.Atingi-Ego explained that the 2021 to 2026 Charter failed due to both external and internal shocks.He cited the COVID-19 pandemic, the Russia-Ukraine war, and the passing of the Anti-Homosexuality Act 2023 that saw World Bank suspend funding to Uganda, yet government spending never decreased, forcing resort to domestic borrowing at high interest rates.“Look, for example, COVID-19, we had to increase our budget deficit. And because the economy was locked down, the budget deficit that you had could not remain credible. We had a situation where Russia invaded Ukraine, and the external environment became so tight that even the borrowing costs externally became so prohibitive,” the Governor said.“And then come in 2023, when the World Bank cut off new financing to Uganda as a result of some law you parliamentarians passed, that affected the amount of new aid that was coming to Uganda. It actually reduced, but government expenditure did not, so you had to resort back to domestic financing. And that domestic financing had serious implications on the interest rates,” he added.“So, what am I saying? The shocks, the risks that we deal with, that when they crystallise, it throws this charter off from your target that you had in there,” Atingi-Ego concluded.The post Uganda’s Public Debt to Hit Shs158 Trillion by July 2027 – BoU Governor Warns appeared first on Business Focus.