Moody’s Investors Service has reaffirmed Uganda’s B3 long-term issuer ratings in both local and foreign currencies and kept the outlook stable, while leaving the local and foreign currency country ceilings at Ba3 and B1 respectively.
The ratings agency cited a combination of structural fiscal pressures and improving external metrics. On the negative side, Moody’s highlighted weak debt affordability stemming from a heavy reliance on relatively expensive domestic financing and limited revenue mobilization, alongside a relatively high overall debt burden and ongoing weaknesses in public finance management.
Moody’s assessment includes quantified projections for the near term. The agency estimates that interest payments will absorb around 30% of government revenue in fiscal year 2025-26, a level it describes as approximately double the median for sovereigns rated in the B2-Caa1 range. It also projects government debt will increase to about 55% of GDP at the end of FY2025-26, compared with roughly 47% of GDP in FY2020-21. The sovereign deficit is expected to widen to 7.6% of GDP in FY2025-26.
At the same time, the sovereign’s external position has shown clear improvement. Foreign exchange reserves rose markedly to $6.0 billion in March 2026 from about $3.3 billion at the start of 2025. The current account deficit narrowed to around 6.5% of GDP in 2025, down from 7.9% in the prior year. Moody’s attributed the smaller deficit in part to strong results in key export sectors, including coffee, tourism and gold refining.
Growth dynamics have also strengthened. Real GDP growth exceeded 6% for a third straight fiscal year in 2025-26. The ratings agency expects an acceleration in growth to roughly 8% during the period between the start of oil production and the ramp-up toward plateau output in 2029. According to Moody’s timetable, oil production is projected to begin in the second half of 2026, with commercialization slated for early 2027.
A rating committee convened on May 26, 2026 to evaluate the sovereign rating. Committee members noted that institutional quality and governance indicators have materially improved. However, they also observed that economic fundamentals, fiscal strength and vulnerability to event-driven risks have not seen material change compared with previous assessments.
Overall, Moody’s decision to maintain the B3 rating and stable outlook reflects a balance between improving external buffers and near-term growth prospects from oil, on one hand, and persistent fiscal and debt affordability pressures, on the other.
Impacted sectors: public finance and sovereign debt markets; energy and oil sector; export-oriented sectors including agriculture, tourism and gold refining.