Uganda’s stock of government-backed loan guarantees increased sharply in the 2024/25 Financial Year, according to the Finance Ministry’s Annual Contingent Liabilities Report.
The report shows that the value of guarantees rose from $120m, about Shs444.4b, to $200m, about Shs740.4b.
The number of active government guarantees also increased from 12 to 15 during the period. The rise was mainly driven by new financing facilities secured by Uganda Development Bank.
However, two guarantees were fully repaid before the end of the reporting period. This reduced the number of active guarantees to 13.
The report also shows a steep rise in approved loans that had not yet been disbursed. These increased from $14.5m, about Shs53.7b, in December 2024 to $84.5m, about Shs312.65b, in December 2025.
The ministry attributed the increase to newly approved loans that had not yet been drawn down. As a result, the value of guarantees rose faster than the actual amounts released.
What Contingent Liabilities Mean
Contingent liabilities are potential financial obligations that government may have to meet in future.
They can arise from government guarantees, legal claims, loans to public institutions, contractual commitments, public-private partnerships and other financial arrangements.
Financial experts often describe them as hidden fiscal risks. This is because they can turn into direct government obligations during periods of economic stress.
If these obligations materialise, government may need to use public funds to settle them. That could increase pressure on public debt.
In notes published with the report, Finance Permanent Secretary and Secretary to the Treasury Ramathan Ggoobi said such obligations require close monitoring.
He cited guarantees to state-owned enterprises, legal proceedings, on-lending arrangements and contractual commitments as potential claims on public resources.
Mr Ggoobi said government efforts during the year focused on supervising guarantees and monitoring state-owned enterprises and extra-budgetary units.
He said the ministry also assessed public-private partnership exposures and liabilities from legal disputes.
According to him, institutional controls, stronger financial reporting and better coordination among government agencies remain important in reducing unmanaged fiscal risks.
He also noted that careful management and transparent disclosure of contingent liabilities help maintain investor confidence.
UDB Takes Largest Share
The report shows that Uganda’s guarantee portfolio remains concentrated in two beneficiaries.
These are Uganda Development Bank and the Islamic University in Uganda.
By December 2024, UDB accounted for about $38.8m, or Shs143.6b, in outstanding guaranteed debt. This represented 80 percent of total exposure.
IUIU held three guarantees with outstanding debt of $9.5m, about Shs35.15b.
By December 2025, UDB’s exposure had increased to $66m, about Shs244.2b, after approval of new facilities.
Over the same period, IUIU’s exposure rose slightly to $10.3m, about Shs38.11b.
As a result, UDB now accounts for 86 percent of all outstanding government-guaranteed debt. This has increased concentration risk in the portfolio.
However, the Finance Ministry said UDB continues to show strong debt-servicing capacity. It also said the bank maintains a high credit rating, which indicates a very low likelihood of default.
Major Lenders Shift
The report also points to changes among lenders providing loans backed by government guarantees.
In December 2024, the largest lender was the OPEC Fund for International Development, with exposure of $16.3m, about Shs60.31b.
The Arab Bank for Economic Development in Africa followed with $11.9m, about Shs44.03b.
The Islamic Development Bank had exposure of $10m, about Shs37b.
Other lenders included the African Development Bank and Exim India.
By December 2025, the Islamic Corporation for the Development of the Private Sector had become the largest lender. Its guaranteed exposure stood at $30m, about Shs111b, linked to UDB.
During the same period, exposure to the OPEC Fund and BADEA declined because of repayments.
Exposure to the Islamic Development Bank increased slightly as more funds were disbursed under an existing facility.
The European Investment Bank also recorded an increase after disbursements started under a new credit line.
Financial Sector Dominates Guarantees
The financial sector continues to receive most government-backed guarantees.
In December 2024, the sector accounted for 81 percent of total guaranteed exposure.
By December 2025, its share had increased to 86 percent.
The education sector, represented only by IUIU, accounted for the remaining share of the guarantee portfolio.
Ministry Says Fiscal Risk Remains Low
The value of disbursed and outstanding guaranteed debt increased from $48.3m, about Shs178.71b, in December 2024 to $76.3m, about Shs282.31b, in December 2025.
The increase came as loan disbursements outpaced repayments.
However, the Finance Ministry said the overall fiscal risk remains limited.
The report shows that guarantees accounted for only 0.09 percent of Gross Domestic Product in 2024 and 0.14 percent in 2025.
This remains well below government’s policy ceiling of 5 percent.
According to the report, contingent liabilities from government guarantees currently pose only a minimal direct burden on the budget.
Repayments to Peak This Year
The report shows that repayments under the guaranteed loan portfolio will be highest in the medium term.
Scheduled repayments are expected to peak at $16.46m, about Shs60.9b, this year.
They are then projected to decline slightly to $16.13m, about Shs59.68b, in 2027.
Repayments are expected to fall further to $14.93m, about Shs55.24b, in 2028.
However, the repayment burden is likely to remain relatively high through 2029 and 2030 before easing in 2031 and 2032.
The data highlights the growing importance of effective risk management as Uganda’s government-backed guarantee portfolio expands.
Although current exposure remains low compared to the size of the economy, rising commitments and concentration in a few beneficiaries underline the need for continued oversight.
