Uganda’s government is set to implement significant reductions in its fiscal strategy for the 2025/26 financial year, aiming to decrease overall spending by over 20% and cut domestic borrowing by more than 50%. This announcement from the finance ministry comes amidst growing concerns regarding the country’s escalating public debt, which has raised alarm among opposition leaders and led to credit rating downgrades by agencies such as Fitch and Moody’s. The government maintains that its borrowing strategy has facilitated economic growth that outpaces many other African nations since the COVID-19 pandemic.
The projected government expenditure for 2025/26 is approximately 57.4 trillion Ugandan shillings (about $15.56 billion), down from the 72.1 trillion shillings allocated for the current fiscal year, according to a draft budget paper released by the ministry. Additionally, the government plans to secure around 4.01 trillion shillings ($1.09 billion) through domestic borrowing via Treasury bonds, marking a 53.9% decrease compared to the 2024/25 fiscal year. The ministry has not elaborated on the reasoning behind these spending and borrowing cuts.
Ramathan Ggoobi, the permanent secretary at the Finance Ministry, indicated that the government’s funding will prioritize sectors such as agro-industrialization, tourism, and minerals, including petroleum. He also noted that external debt repayments are projected to increase to 4.03 trillion shillings in 2025/26, up from 3.1 trillion shillings in the current fiscal year, which may further constrain domestic spending capabilities.
