Uganda’s Economic Growth Faces Budget and Debt Pressures

Corporate editorUpdated 3 weeks Ago1 Mins read152

Parliament’s scrutiny of the proposed financial year 2026/27 budget is being shaped by growing concern over poor budget execution and rising public debt, despite Uganda’s economic growth remaining steady.

A report presented by Budget Committee Chairperson Remigio Achia shows that only 62.8 per cent of the budget had been absorbed by the halfway mark of the financial year 2025/26. Lawmakers say this weak performance, largely linked to delays in externally funded projects, continues to undermine service delivery.

Public Debt Hits UGX 126.18 Trillion

Meanwhile, Uganda’s public debt has climbed to UGX 126.18 trillion, with domestic borrowing taking an increasing share. This trend is prompting concern among legislators about the pressure on future government spending, particularly as debt servicing costs continue to rise.

These concerns come even as the economy shows signs of resilience. The country registered a 6.7 per cent economic growth in the first half of the financial year, driven by agriculture, industry and services. Inflation has also remained stable at 3.5 per cent, below the 5 per cent target.

Revenue Shortfall Widens Fiscal Deficit

However, revenue collection is not keeping pace. Tax revenue fell short of its target by UGX 1.08 trillion, despite posting an 8.2 per cent increase compared to the previous year. Combined with higher government spending, this resulted in a fiscal deficit of UGX 6.526 trillion.

With these mixed signals, Parliament now faces a critical decision: whether to approve the new budget as proposed or push for stronger accountability measures to improve spending efficiency and manage rising debt.

Debate on the budget is expected to intensify as lawmakers weigh economic growth against persistent structural challenges.