EA News Uganda

Uganda is signaling a notable fiscal policy adjustment for the 2026/27 financial year, with the government tightening its budget framework while prioritizing domestic revenue growth and more sustainable borrowing.

According to the Ministry of Finance, the preliminary resource envelope for FY2026/27 stands at Shs. 69.399 trillion, down from Shs. 72.376 trillion in the current financial year. Despite the overall reduction, domestic revenue is projected to increase significantly to Shs. 40.090 trillion, up from Shs. 36.806 trillion in FY2025/26, highlighting a stronger focus on domestic resource mobilisation.

Government discretionary funding—after accounting for arrears, interest payments, and domestic debt repayments is expected to decline slightly to Shs. 31.059 trillion, compared to Shs. 32.480 trillion this year. Meanwhile, domestic borrowing is projected to fall to Shs. 8.952 trillion, down from Shs. 11.381 trillion, reflecting efforts to reduce reliance on short-term domestic debt.

Debt refinancing is also set to ease, with roll-over obligations declining to Shs. 9.68 trillion from Shs. 10.028 trillion. On the external front, budget financing is projected to drop sharply from Shs. 2.084 trillion to Shs. 330.97 billion, while external project financing will decline to Shs. 10.018 trillion, down from Shs. 11.327 trillion.

The government plans to finance the FY2026/27 budget through a mix of domestic and external resources, including tax revenues, concessional loans, and grants. Borrowing will increasingly focus on concessional sources for social investments, alongside innovative financing mechanisms to fund high-return infrastructure projects.

At the same time, authorities are re-prioritising expenditures to improve allocative efficiency, strengthen domestic revenue mobilisation, and attract more foreign direct investment. The fiscal strategy will be supported by continued adherence to sound fiscal and monetary policies aimed at preserving macroeconomic stability and improving Uganda’s credit profile.

What This Means

Leaner Budget, Tighter Spending
A smaller resource envelope signals a shift toward fiscal consolidation, with government aiming to manage debt pressures and improve spending efficiency.

Stronger Focus on Domestic Revenue
Higher projected tax revenues indicate intensified efforts to boost domestic resource mobilisation, reducing reliance on external financing.

Reduced Borrowing Pressure
Lower domestic borrowing and refinancing needs suggest a move to ease pressure on local credit markets and stabilize public debt dynamics.

Decline in External Financing
Sharp reductions in external budget support and project financing may require stricter prioritization of development projects and improved execution efficiency.

Key take-Out

Leaner Budget, Tighter Spending
A smaller resource envelope signals a shift toward fiscal consolidation, with government aiming to manage debt pressures and improve spending efficiency.

Stronger Focus on Domestic Revenue
Higher projected tax revenues indicate intensified efforts to boost domestic resource mobilisation, reducing reliance on external financing.

Reduced Borrowing Pressure
Lower domestic borrowing and refinancing needs suggest a move to ease pressure on local credit markets and stabilize public debt dynamics.

Decline in External Financing
Sharp reductions in external budget support and project financing may require stricter prioritization of development projects and improved execution efficiency.

Smarter Investment Strategy
The government’s emphasis on concessional loans and innovative financing for high-return infrastructure signals a pivot toward growth-enhancing investments rather than consumption-driven spending.

Stability as a Priority
Commitment to sound fiscal and monetary policy underscores Uganda’s focus on maintaining macroeconomic stability and improving its creditworthiness.

Credit: Uganda Ministry of Finance, Planning and Economic Development Smarter Investment Strategy
The government’s emphasis on concessional loans and innovative financing for high-return infrastructure signals a pivot toward growth enhancing investments rather than consumption driven spending.

Stability as a Priority
Commitment to sound fiscal and monetary policy underscores Uganda’s focus on maintaining macroeconomic stability and improving its creditworthiness.

Credit: Uganda Ministry of Finance, Planning and Economic Development

29. January 2026/ Urge- DeveWire

Uganda Signals Fiscal Reset with Leaner Budget and Stronger Revenue Push

Urge- DeveWire

Urge- Growth Daily

Urge- DevWire

Urge Skill-Up

Knowledge is power.

Stay connected. Be informed.