Uganda Plans Significant Budget Cuts for 2025/26

KAMPALA (Reuters) – Uganda’s government plans to cut spending by just over a fifth and domestic borrowing by just over a half in the 2025/26 (July-June) fiscal year, the finance ministry said on Friday.

Uganda’s rising public debt load has been fuelling concerns among opposition politicians and has also triggered ratings agencies Fitch and Moody’s to cut the country’s credit rating.

The government asserts that borrowing has been utilized to stimulate economic growth, which has outpaced many of its African peers since the COVID-19 pandemic.

Overall government spending for 2025/26 is projected at 57.4 trillion Ugandan shillings ($15.56 billion), compared with 72.1 trillion shillings planned for the current financial year, according to a draft budget paper from the ministry.

The government intends to borrow approximately 4.01 trillion shillings ($1.09 billion) from the domestic market via Treasury bonds during the same period, representing a 53.9% decrease from 2024/25.

The ministry did not provide a reason for the drop in spending or borrowing figures.

Ramathan Ggoobi, the Finance Ministry’s permanent secretary, indicated that the government’s funding priorities will focus on agro-industrialisation, tourism, and minerals, including petroleum.

Ggoobi also mentioned that external debt repayments are expected to rise to 4.03 trillion shillings in 2025/26 from 3.1 trillion shillings in the current fiscal year, adding further pressure on domestic spending.

($1 = 3,689.0000 Ugandan shillings)