Fitch Ratings has kept Uganda’s long-term foreign currency rating at B with a stable outlook. This means they think Uganda’s economy will grow well, but there are still money problems that could slow it down.
The country’s economy is expected to grow from 6.3% in 2024 to 6.5% in 2025 and 7.5% in 2026. The main reasons are new oil projects, better farming results, strong coffee exports, and government spending on roads and other infrastructure. Oil production is planned to start in late 2026 and could reach about 230,000 barrels a day by 2028. If that happens, growth might jump to around 9% in 2027. But oil production depends on a big $5 billion pipeline being finished, which has already faced delays.
Uganda’s budget deficit, which is when the government spends more than it earns, got bigger. It went from 4.7% of GDP last year to 6.1% this year. This is mainly because of higher spending on security, loan interest, and big projects. The gap is expected to stay high at 6.7% in 2026 before going down in 2027 when oil money starts coming in.
Because Uganda has less access to cheap loans from outside the country, it has been borrowing more locally, which is more expensive. This has made interest costs rise sharply. By 2026, interest payments could take up 30% of all government revenue before easing when oil revenue grows.
The country is also in talks with the IMF for a new deal after its last program fell through. The World Bank restarted lending earlier this year but will only give money for specific projects, not for the general budget.
Uganda’s debt has grown from 48.6% of GDP in 2024 to 52.5% in 2025 and is expected to stay around 53% in the coming years. The share of foreign debt is now less than half of total debt, down from 60% in 2023.
The trade gap is expected to shrink as exports grow, especially coffee. In the first half of 2025, coffee exports already reached more than 82% of last year’s total. Oil production will also help reduce the gap in the next few years.
Uganda’s foreign reserves went up to $4.3 billion in mid-2025 from $3.3 billion in 2024. But they are likely to drop later this year as the country uses them to pay for imports and loans.
The 2026 presidential election could bring political tension. President Museveni, now 80, plans to run again after 40 years in power. This could create risks for the economy, but Fitch does not think it will scare away foreign investors too much.