Rating Release
Agusto & Co. upgrades the rating assigned to the Republic of Uganda to a “B+” rating with a stable outlook.
The rating upgrade underpins the Nation’s improving macroeconomic fundamentals, reflected by the expanding 5-year real gross domestic product (GDP) average growth rate of 5.2% and a projected 6.5% acceleration in FY 2025/26, buoyed by continued growth in the agriculture and industry sectors. Uganda’s subdued inflationary environment, as evidenced by an average inflation rate of 4.2% over the past five years (2021–2025), coupled with a decreasing debt service-to-revenue ratio of 26.2%, as of 30 June 2025, has also been taken into account. Nonetheless, the rating remains constrained by political risk, including perceived limitations on civic and opposition freedoms, political succession uncertainties following the January 2026 elections, structural dependence on foreign aid and grants, which are gradually declining as a source of foreign exchange as well as elevated debt-to-GDP ratio of 51% and heightened level of government expenditure owing to persistent supplementary budgets beyond the programmed spending.
Going forward, we expect expansion in the Country’s exports on the back of strengthened coffee and refined gold exports and industrialisation, supported by the commencement of commercial crude oil production in 2026 through projects such as Tilenga and Kingfisher, located in the Lake Albert region of western Uganda. Also, we anticipate the resulting foreign direct inflows to boost Uganda’s balance of payments over the near to medium term. Furthermore, Uganda projects to record Ushs 39.97 trillion revenue in the FY 2025/26 budget, anchored on continued strengthening in revenue administration and compliance, buoyed by implementation of the fourth National Development Plan and the ten-fold growth strategy, which focuses on accelerating GDP growth to at least 6.5% in 2026. Agusto & Co. anticipates a shift towards industrialisation, domestic value addition and a knowledge-based economy, with ease of doing business, making Uganda competitive.
