KAMPALA, UGANDA — Uganda’s domestic debt market surged in March 2025, with the government mobilizing a total of Shs1.85 trillion through the sale of Treasury Bills and Bonds, according to the Performance of the Economy Report released by the Ministry of Finance.
The month’s borrowing strategy reflects Uganda’s ongoing reliance on domestic financial markets to fund key budgetary obligations amid constrained external financing options.
Breakdown: T-Bills vs. T-Bonds
- Shs 715.80 billion was raised from Treasury Bills (T-Bills)
- Shs 1,131.61 billion came from Treasury Bonds (T-Bonds)
- Shs 1,360.18 billion went toward budget financing
- Shs 487.23 billion was used to refinance maturing debt
This strong performance signals investor confidence, supported by a relatively stable macroeconomic environment.
Interest Rate Movements Reflect Market Dynamics
- 182-day T-Bill yield: ↓ to 13.17% (from 13.95%)
- 364-day T-Bill yield: ↓ to 14.75% (from 15.00%)
- 91-day T-Bill yield: ↑ to 11.33% (from 10.69%)
The upward movement on the 91-day instrument suggests short-term liquidity positioning or expectations of rate adjustments ahead.
All T-Bill auctions were oversubscribed, with an average bid-to-cover ratio of 2.9, meaning investors offered nearly three times more than what government sought to borrow.
Bond Market Trends
The government reopened 3-year, 10-year, and 20-year bonds:
- 3-year bond yield: ↓ to 16.20%
- 10-year bond yield: flat at 17.10%
- 20-year bond yield: ↓ to 17.50%
Analysts point to falling inflation expectations and increased trust in long-term government securities as key drivers.
Fiscal Implications and Risks
While the report underscores a healthy appetite for government securities, experts warn of potential risks:
- Crowding out private credit
- Elevated cost of borrowing for businesses
- Mounting debt-servicing obligations
Nonetheless, the March results suggest that financial institutions remain highly liquid, and domestic borrowing continues to serve as a pillar of fiscal resilience.
“As global financing tightens, Uganda’s domestic market remains a lifeline,” one economist noted. “But sustainability must be closely monitored.”
Looking Ahead
With another Performance Report expected soon, policymakers and economists alike will be watching to see if Uganda can maintain this momentum without increasing fiscal vulnerabilities.
