Public Debt and Economic Growth in Uganda: Channels, Thresholds and Policy Implications

Uganda's public debt has risen from about 46.8 percent of GDP in 2023/24 to roughly 54.3 percent at end-June 2026, breaching the 50 percent anchor in the Charter of Fiscal Responsibility, even as real GDP growth has accelerated on the back of oil-related investment. This paper examines how public debt affects economic growth in Uganda. Drawing on the theoretical and empirical literature on the debt-growth nexus and on recent official data, it assesses four transmission channels (public investment, crowding out, debt overhang, and debt-service pressure on fiscal space) and argues that the composition and use of debt matter more for growth than the headline ratio alone. It situates Uganda within the debt-sustainability frameworks used by the International Monetary Fund and the World Bank, in which debt relative to revenue, rather than to output, is the binding constraint for low-revenue economies. It concludes that Uganda's debt remains sustainable at a moderate risk of distress, but that the shift toward costly domestic borrowing and a rising interest-to-revenue ratio weaken the debt's growth dividend. The paper develops a conceptual framework linking the four channels to growth, outlines an empirical strategy for testing the relationships, and offers a set of policy recommendations for preserving the growth dividend of borrowing.