For 20 years, the answer to every Uganda economic problem has been the same. Budget tight? Wait for the oil. Shilling falling? Wait for the oil. Must defend a new tax? Just wait until the oil flows.
The oil moves, the loans do not
But the oil keeps moving. We found it in 2006. At first we were told it would flow by 2018. Then 2020, then 2025. This year it was July 2026, and now the Finance minister has told Parliament it will be before the end of June 2027. The dates for paying the loans did not move. Only the oil date did.
Economists have a name for this. Two researchers, James Cust and David Mihalyi, call it the presource curse. They studied giant oil and gas discoveries around the world and compared actual growth with what the IMF had forecast.
Growth fell short even before the first barrel was pumped, and most of all where institutions are weak. The reason is simple. People start spending as if the money has already arrived.
A government borrows from the future, and if the future is late, the sums stop adding up. And lateness is normal in this business. In 2014, EY looked at 365 big oil and gas projects and found that almost three quarters were behind schedule. So a national budget built on one oil start date is a bet, and the odds are not good.
The bill we already pay
Look at what the IMF has pencilled in. Its December report had oil bringing in 1.2% of GDP in 2026/27. By its July review, that was cut to 0.6%, then 1.7% the year after, and 2.1% by 2029/30.
The December report also had interest payments at 4.5% of GDP this year, rising to 5.1% in 2029/30. So even four years from now, with oil flowing, oil money pays for less than half of the interest bill. And interest already takes almost a third of domestic revenue. That is the good case. The IMF Board lists further oil delays as a downside risk.
Now look at this year’s budget. Shs 12.4 trillion goes to interest alone. That is more than the Shs 9.7 trillion for all wages and salaries, and more than double the Shs 5.23 trillion for health.
Most of our debt (56%) is borrowed at home, and it is expensive. The average rate on domestic debt is 15.5%, against 9.5% on all public debt. A bank that can lend to the Treasury at that rate has little reason to lend to a trader, and the IMF Board has already flagged the crowding out of private credit.
None of this is new. In 2013, debt was expected to peak at 31% of GDP. In 2016 the expected peak was 44%, and by 2019 it was 49.5%. The IMF now puts public debt at 55.1% of GDP for 2025/26, heading to 59.2% by 2030/31. The oil date and the debt forecast keep moving, and both keep moving the wrong way.
The world we are selling into
Then there is the world we want to sell to. Brent ended 2 October at $102.25 a barrel, with the Iran war still choking the Strait of Hormuz, and Uganda has no oil to sell. The US EIA expects Brent to average $96 this year and $84 next year, when our oil is meant to start.
But the same high price is teaching the world to walk away from oil. The IEA now expects about 29% of cars sold worldwide this year to be electric, and more than 60% in China.
In India, Brazil and Vietnam, electric car sales roughly doubled between March and June compared with the same months last year. Road transport takes nearly half of the world’s oil. Nobody is switching off oil tomorrow. But the biggest car markets are going electric fastest, and the high price is what is pushing them.
Who checked the sums?
Parliament approves government borrowing. So who looked at the papers, and what oil date did they assume when the loans were signed? Did anyone model what happens if first oil comes in 2029? Did anyone run the budget with crude at $60 a barrel?
I am not saying we should leave the oil in the ground. Most of the construction is done, and the pipeline should be ready to receive crude by mid-December. But we must not spend money we do not have.
So here is what I am asking for. First, the ministry of Finance must publish one clear list of all oil-linked loans and guarantees, with what each one costs us every year. Second, oil revenue must not be added to the budget until the first barrel is sold. Third, the debt stress tests must be run in public before the next budget is passed, including one with a lower oil price.
The oil will probably come in the end. The real question is what will be left of it. If the lenders already have first claim on every barrel that comes out of Bunyoro, we would not have built an oil industry. We would have built a very expensive pipeline to pay off our creditors.
The writer is an economist and Political Economy Fellow at the University of Johannesburg