Government Loan Guarantees Surge to $200 Million

The value of government loan guarantees in Uganda has seen a substantial rise, climbing from approximately $120 million to $200 million during the 2024/25 fiscal year. This increase, as detailed in the Finance Ministry’s Annual Contingent Liabilities Report, is largely attributed to new financing arrangements obtained by the Uganda Development Bank (UDB).

The report indicates that the number of active guarantees expanded from 12 to 15, although two were fully repaid, bringing the active count to 13 by the period’s end. Notably, the amount of approved but undisbursed loans also saw a sharp increase, highlighting that while the potential government exposure grew, the actual funds released were less.

Contingent liabilities, which encompass government guarantees and other financial agreements, are identified as potential risks that could become direct government obligations during economic downturns. Finance Permanent Secretary Ramathan Ggoobi emphasized the importance of closely monitoring these liabilities, including those stemming from state-owned enterprises and legal proceedings, to safeguard public resources.

The UDB remains the dominant recipient of these guarantees, accounting for an increased share of 86% of the total outstanding guaranteed debt by December 2025. This concentration, while raising concerns about concentration risk, is offset by UDB’s strong financial standing and low likelihood of default.

The financial sector continues to be the primary beneficiary of these guarantees, capturing 86% of the total guaranteed exposure, with the education sector receiving the remainder. Despite the growth in guarantees, the Ministry of Finance noted that overall fiscal risk remains limited, with the total value of guarantees representing only 0.14% of GDP, well within the government’s policy ceiling.

This data underscores the growing significance of robust risk management practices as the portfolio of government-backed guarantees expands, necessitating continued oversight to protect public finances. https://www.monitor.co.ug/uganda/business/markets/govt-loan-guarantees-rise-to-200m—5492018