Revenue underperformance and difficult financing conditions are resulting in funding gaps and rising debt-servicing costs for Uganda, alongside underspending on much needed capital expenditure. Large import requirements for substantial oil projects are pushing up already sizable external imbalances, while fiscal pressures remain. However, economic growth remains relatively strong and is forecast to average 5.3% annually over 2023-2026, supported by an IMF program. We affirmed our 'B/B' sovereign credit ratings on Uganda and maintained the negative outlook on the long-term rating. On June 2, 2023, S&P Global Ratings affirmed its 'B' long-term and 'B' short-term foreign and local currency sovereign credit ratings on Uganda. The outlook remains negative. The negative outlook reflects our view that Uganda's large fiscal and external deficits
