Bank of Uganda Governor Dr. Michael Atingi-Ego has warned the Government against excessive domestic borrowing, saying it could push up interest rates and constrain access to credit by the private sector.

Atingi-Ego made the remarks while appearing before Parliament’s Committee on Budget, chaired by Hon. Gabriel Okumu, to present the Charter of Fiscal Responsibility for the 2026/27 to 2030/31 financial years.

The Governor said Uganda’s domestic financial market has the capacity to absorb the Government’s planned borrowing of Shs12.7 trillion.

However, he cautioned against borrowing beyond the projected level, warning that excessive government demand for funds could put pressure on interest rates and limit credit available to businesses and other private-sector borrowers.

Atingi-Ego noted that private-sector credit had grown by 16.1 per cent by the end of June 2026, underscoring the need to ensure that increased government borrowing does not undermine financing for the private sector.

Committee Chair Gabriel Okumu called on Parliament’s Budget and National Economy Committees to closely scrutinise Government borrowing and discourage excessive reliance on domestic financing.

Atingi-Ego also called for a review of Uganda’s fiscal debt path, particularly for the 2026/27 financial year.

He said some of the projections contained in the Charter of Fiscal Responsibility could become difficult to achieve if the debt base used in the projections is inconsistent with the country’s current debt position.

By Francis Lubega