The Government of Uganda has tabled its national budget for the financial year 2025/26, unveiling a 72.376 trillion-shilling plan aimed at jumpstarting the implementation of the Fourth National Development Plan (NDPIV) and propelling the country towards its Vision 2040 economic goals.
However, the budget also comes with stern new warnings to accounting officers regarding the accumulation of domestic arrears, amid growing concern over Uganda’s rising debt levels.
Finance Minister Matia Kasaija, while delivering the budget speech, emphasized the government’s commitment to stricter fiscal discipline, announcing penalties for accounting officers responsible for arrears.
He also outlined a comprehensive three-year strategy to eliminate domestic arrears starting in the 2025/26 fiscal year, prioritizing payments to suppliers, contractors, land compensations, and war claimants.
Out of the total budget, 16 trillion shillings will go toward servicing national debt, including both domestic and external obligations.
Domestic debt refinancing alone will cost the government 10.03 trillion, while 4.98 trillion will go to debt repayments. Of this, 493 billion shillings is earmarked for repayments to the Bank of Uganda.
Mounting Debt Concerns
Uganda’s national debt—comprising domestic borrowing, arrears, and external loans—is expected to exceed 30 billion dollars by the end of the next fiscal year.
The government has defended its borrowing patterns, citing the need to finance development projects and support economic growth.
However, economists and civil society actors have repeatedly warned that the country risks entering a debt distress zone if borrowing is not curtailed.
Speaking ahead of the budget reading, Speaker of Parliament Anita Among called for greater parliamentary oversight over key government initiatives, especially those focused on wealth creation and core infrastructure projects.
“There is a need to instill discipline in the implementation of the budget,” Among said.
“We must limit how much the government can request in supplementary budgets and ensure these are reserved for only unforeseen emergencies.”
Among also stressed the importance of prioritizing household livelihood improvement programs and strategic sectors under NDPIV, calling for more targeted funding and effective implementation.
Funding Sources and Revenue Targets
The 2025/26 resource envelope will draw 37.55 trillion shillings from domestic revenue—33.94 trillion from tax revenue and 3.28 trillion from non-tax sources. Local government collections are expected to contribute 328.6 billion.
To bridge the remaining gap, Uganda plans to borrow 11.38 trillion shillings from domestic sources and refinance 10.03 trillion in maturing domestic debt.
Additionally, 2.08 trillion will be secured through external borrowing for general budget support, while 11.33 trillion will fund development projects, including 2.8 trillion in grants.
Kasaija announced plans to raise an extra 1.89 trillion shillings through improved tax administration and an additional 538.6 billion from new tax policy measures approved by Parliament.
These reforms are part of a broader financing strategy aimed at boosting domestic revenue and aligning expenditures with the Tenfold Growth Strategy, which targets a 500 billion dollar economy by 2040.
Spending Priorities
Expenditure allocations include 8.57 trillion shillings for wages and salaries and 28.33 trillion for non-wage recurrent expenses.
These will cover institutional operations, health and education sector grants, infrastructure maintenance, and funding for science and technology innovations.
Wealth creation programs will also receive a funding boost as part of efforts to stimulate inclusive growth and reduce household poverty.
To diversify development finance, the government intends to mobilize concessional funding from international lenders like the World Bank, IMF, and African Development Bank.
Innovative financing options such as public-private partnerships (PPPs), Sukuk bonds, diaspora bonds, and climate finance will also be explored.
Economic Outlook
The economy is projected to grow by 7% in the next fiscal year, up from 6.3% in 2024/25 and 6.1% the previous year. Growth is expected to be driven by agriculture, manufacturing, and the services sector.
While the government’s ambitious plans and projected economic rebound offer some optimism, fiscal experts caution that success will depend heavily on the discipline and transparency with which the budget is implemented—especially in managing debt and ensuring that funds reach their intended beneficiaries.
As Uganda enters the second half of Vision 2040, all eyes will be on whether this budget delivers the promised transformation without sinking the nation deeper into unsustainable debt.
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