The International Monetary Fund (IMF) has completed its Post-Financing Assessment (PFA) of Uganda and affirmed the country’s capacity to repay its obligations to the Fund, despite rising fiscal pressures.
The assessment, concluded on January 12, 2026, was approved on a lapse-of-time basis without a formal meeting of the IMF Executive Board. Ugandan authorities also consented to the publication of the accompanying staff report.
According to the IMF, Uganda has navigated the post-pandemic period relatively well, delivering strong macroeconomic results even as progress in rebuilding fiscal buffers has been limited. Real GDP growth accelerated to 6.3 per cent in the 2024/25 fiscal year, while inflation remained subdued at below 4 per cent.
External sector performance also improved. The current account deficit narrowed to an estimated 6.1 per cent of GDP, largely driven by strong coffee exports. Foreign exchange reserves rose to more than three months of import cover by October 2025, supported by robust portfolio inflows.
However, fiscal pressures intensified over the same period. The overall budget deficit widened to 6 per cent of GDP in FY2024/25 from 4.7 per cent the previous year, while public debt climbed to 52.4 per cent of GDP.
The IMF assessed Uganda’s repayment capacity as adequate, though not without risks. Stress scenarios involving large portfolio outflows, adverse terms-of-trade shocks, or further delays in the oil project would weaken repayment indicators, but these would still remain within acceptable limits.
Looking ahead, the Fund expects macroeconomic conditions to remain broadly favourable, with additional support from oil production, which is projected to begin in late 2026. Ugandan authorities acknowledged the need for fiscal adjustment and reaffirmed their commitment to prudent monetary policy and a flexible exchange rate to maintain stability and safeguard repayment capacity.
IMF Directors noted that Uganda’s strong performance has been underpinned by resilient domestic demand, supportive external conditions and disciplined monetary policy. Improved investor sentiment has also played a role, reflecting high real returns and the country’s relative stability in a volatile regional environment.
Nonetheless, Directors cautioned that fiscal vulnerabilities are growing due to elevated deficits and a rising debt-service burden. While public debt remains sustainable, they highlighted risks linked to domestic financing pressures and weaknesses in budget execution.
IMF staff recommended a multi-pronged policy approach to accelerate fiscal consolidation, including stronger revenue mobilization and tighter control of current spending. While welcoming improvements in tax administration, the Fund urged further tax policy reforms, such as rationalizing tax exemptions and broadening the tax base.
Strengthening public financial management was also identified as a priority, particularly to enhance budget discipline and reduce frequent in-year spending pressures. Effective implementation of the oil revenue management framework will be critical to preserving fiscal discipline once oil revenues begin to flow.
On monetary policy, the IMF advised maintaining a data-driven and forward-looking stance. As inflationary pressures ease, a gradual policy easing could help support private-sector credit growth. The Fund also highlighted the importance of strengthening monetary transmission and deepening financial markets, including through FinTech-enabled lending and improved credit infrastructure, to promote inclusive growth.
The IMF emphasized the role of exchange rate flexibility in absorbing external shocks and maintaining competitiveness, while encouraging a cautious buildup of foreign exchange reserves. It noted that the pilot gold purchase programme could support reserve accumulation, but stressed the need for careful management to limit financial and operational risks.
Uganda’s financial sector was assessed as broadly resilient, supported by improved asset quality and stronger capital buffers. However, the Fund warned that rising sovereign-bank linkages warrant close monitoring and called for enhanced supervision and risk management, particularly as FinTech lending continues to expand.
