Public Debt and Service Delivery in Developing Economies; A Caseof Uganda

Abstract

This study was concerned with how public debt is related to service delivery in the developing world, with Uganda being the case in point. The general aim was to examine how public debt affects the delivery of services, while the particular aims were: to explain the nature of Uganda's public debt; to assess debt management practices; to identify debt management challenges; and to examine how debt affects the delivery of services. A descriptive research design was used, based on secondary data collected from government reports, international organization publications such as the IMF, World Bank, and AfDB, and peer-reviewed literature post-2018. Data were synthesized through thematic analysis guided by study objectives.

The debt was reported to have increased vastly in Uganda, doubling between 2019 and 2023 from UGX 46 trillion to UGX 96 trillion, with foreign debt accounting for more than 60 percent. Debt has been used to finance developing big infrastructure projects but has also increased the level of debt to GDP to 52.4 percent in 2024, which is almost at the unsustainability level. Debt management culture, although institutionalized through the Public Finance Management Act and the Medium-Term Debt Strategy, remains undermined by loopholes of transparency, weak enforcement, and supplementary borrowing. Challenges revolve around a rising debt service burden taking over 32 percent of revenues, weak domestic revenue mobilization, overreliance on foreign lenders such as China, weak loan absorption, and inadequate parliamentary oversight. With regards to service delivery, the study proved that debt repayment obligations have sparse budgetary provisions to priority areas. For example, in FY2025/26, the health and education sectors got 10 and 9 percent of the budget, respectively, compared to 32.5 percent absorbed by debt servicing. This has resulted in under-funding of social sectors, rural-urban inequality, and the threat of future austerity.

The report finds that Uganda's debt trajectory, barring action with a sense of urgency, threatens fiscal well-being as much as the government's ability to deliver its service commitments. It recommends that Uganda prioritize stronger domestic revenue mobilization, learn from Kenya's tax base growth and Rwanda's digital tax administration, and strengthen debt transparency by following Ghana's availability of loan registers. Moreover, strengthening parliamentary oversight and ensuring that debt is associated with productive and equitable investment will be important in avoiding debt distress and safeguarding service delivery.