• Uganda’s post-pandemic economic performance has been robust, supported by broad-based growth and contained inflation. Foreign exchange reserves rose significantly in 2025, reflecting a favorable external environment, including strong coffee exports and portfolio inflows.
• Uganda’s capacity to repay the Fund is assessed as adequate, though subject to risks from potential portfolio outflows, commodity price shocks and further delays related to the oil project.
• The authorities recognized the need for fiscal adjustment and reaffirmed their commitment to vigilant monetary policy and exchange rate flexibility, to safeguard macroeconomic stability and repayment capacity.

Washington DC: On January, 12, 2026 the Executive Board of the International Monetary Fund (IMF) concluded the Post-Financing Assessment (PFA) with Uganda and considered and endorsed the staff appraisal without a meeting on a lapse-of-time basis.[2] The authorities have consented to the publication of the Staff Report prepared for the PFA discussions.

Uganda has navigated the post-pandemic environment relatively well, though progress in rebuilding durable fiscal space has been limited. Real GDP growth rose to 6.3 percent in FY24/25, inflation stabilized below 4 percent, and the estimated current account deficit narrowed to 6.1 percent of GDP, supported by strong coffee exports. Foreign exchange reserves increased to over three months of import coverage by October 2025, partly reflecting strong portfolio inflows in 2025. However, the overall budget deficit widened to 6 percent of GDP in FY24/25 from 4.7 percent in FY23/24, and public debt reached 52.4 percent of GDP.

Uganda’s capacity to repay the IMF is assessed as adequate, though subject to risks. In a downside scenario involving large portfolio outflows, adverse terms-of-trade shocks, and further delays in the oil project, repayment indicators would weaken but remain within adequate levels.

Looking ahead, macroeconomic conditions are expected to remain favorable with an additional boost from oil production, which is projected to start in late 2026. The authorities recognized the need for fiscal adjustment and reaffirmed their commitment to vigilant monetary policy and exchange rate flexibility, to safeguard macroeconomic stability and repayment capacity.

Executive Board Assessment

In concluding the PFA with Uganda, Executive Directors endorsed staff’s appraisal, as follows:

Uganda’s robust macroeconomic performance continued, supported by strong domestic demand, favorable external conditions, and prudent monetary policy. Real GDP growth accelerated to 6.3 percent in FY2024/25, inflation remained contained, and the current account deficit narrowed significantly. Foreign exchange reserves increased, and investor sentiment improved, reflecting high real returns and Uganda’s relative stability in a volatile regional environment. However, fiscal vulnerabilities are on the rise due to elevated overall deficits and a high debt servicing burden. While public debt remains sustainable, it faces risks from domestic financing pressures and weaknesses in the budgetary process.

Staff assesses Uganda’s capacity to repay the Fund as adequate under both baseline and downside scenarios. Repayment indicators under the baseline scenario remain below median thresholds for ECF countries. Risks to repayment capacity arise from potential portfolio outflows, commodity price shocks, further delays in oil production, and governance weaknesses. A downside scenario indicates that, even under significant external and domestic shocks, Uganda’s repayment position would remain manageable, although policy buffers would come under strain.

Staff recommends a multi-pronged policy approach to safeguard macroeconomic stability and repayment capacity. Fiscal consolidation should be accelerated through durable revenue mobilization and rationalization of current spending. The authorities’ updated domestic revenue mobilization strategy rightly focuses on measures to improve tax administration but should also bring forward tax policy measures including rationalization of tax expenditures and strengthening and broadening the tax base. The authorities should prioritize PFM reforms to enhance budget discipline and limit the scope for accommodating frequent in-year spending requests. The implementation of the adopted oil revenue frameworks is important to safeguard oil revenues and preserve fiscal discipline.

Monetary policy should retain its data-driven and forward-looking approach. As inflation risks recede, a gradual easing could support private sector credit growth. Strengthening monetary policy transmission and promoting financial deepening, particularly through FinTech-enabled lending and improvements in credit infrastructure—will be critical to supporting private sector activities and fostering inclusive growth. The recent securitization and repayments of BoU advances reflect progress in limiting central bank financing; adhering to the agreed repayment schedule and limiting BoU advances to the limits stipulated under the PFM Act remains important to fend off risks of fiscal dominance and ensure monetary policy credibility.

Exchange rate flexibility remains essential to absorb external shocks and preserve competitiveness. Rebuilding of FX reserves should continue in a sustainable and durable manner. The pilot gold purchase program offers potential to support FX reserves buildup but must be carefully managed to mitigate financial and operational risks.

The financial sector remains resilient, with improved asset quality and capital buffers. However, rising sovereign-bank linkages warrants close monitoring. Strengthening supervision, risk management, and regulatory framework, especially in the context of expanding FinTech lending, is necessary to safeguard financial stability.

Source: IMF