Uganda's fiscal deficit is projected to decline to 3% of GDP by the 2030/31 financial year from 6% of GDP this year, helped by a new debt strategy that leans more on cheaper external credit, a central bank report showed on Wednesday.

The report also said Uganda's public debt outlook was assessed to be at a moderate risk level "although rising debt service costs and limited shock absorption capacity point to underlying vulnerabilities".

Uganda's total public debt stock rose 8% to $34.9-billion in the second half of last year, mainly driven by higher issuance of domestic debt, according to the finance ministry.

The central bank said GDP growth rose to 8.5% in the second quarter of the 2025/26 fiscal year, up from 5.3% in the second quarter of the year before, supported by oil-related investments and robust exports and agricultural production.

In March, the finance ministry published a new debt management strategy that showed Uganda would seek to increase its external borrowing while trimming costly domestic credit to help cut back on rising interest payments.