FILE PHOTO: A general view shows the capital city of Kampala in Uganda, July 4, 2016. REUTERS/James Akena/File Photo

KAMPALA (Reuters) -Uganda's total public debt rose 26.2% in the 2024/2025 financial year as the government expanded its domestic borrowing to meet financing needs, a finance ministry annual report on public debt showed on Friday.

The east African country's total public debt rose to $32.3 billion in the twelve months to June, up from $25.6 billion in the previous period, according to the report.

Uganda's public debt pile has been growing at an accelerated rate in recent years as the government of President Yoweri Museveni splurges on big infrastructure projects in energy, transportation and other sectors.

The central bank and others have warned the cost of repayments was eating away resources needed for other critical sectors like education and health.

Most of the growth in indebtedness in the financial year to June was driven by a surge in domestic borrowing, which grew 52.7% compared to external credit which rose 6.2%.

"The shift towards higher domestic borrowing explains the rise in both the nominal debt stock and the cost of debt," the report said.

The tilt toward domestic borrowing, the report added, "has elevated debt service costs given the higher yields demanded by the local market."

As a percentage of GDP, the country's debt rose to 51.3% in the year to June, from 46.9% in the previous period.

(Reporting by Elias Biryabarema; editing by Sharon Singleton)