The government has read out to the public its budget proposals for the year 2025/26, with new warnings to accounting officers against accumulating arrears.
Government debt, including domestic borrowing, domestic arrears and external loans has been a centre of contention between the government on one side, and the public on the other, with the government defending its continued accumulation of debt, while experts warn that the debt levels could go into risky zones soon.
The high borrowing levels have been blamed on unplanned expenditures and poor supervision of government projects, among others, with the national debt expected to go above 30 Billion Dollars by the end of the next financial year.
Speaking just before the presentation of the budget by the Ministry of Finance, Planning and Economic Development, Speaker of Parliament, Anita Among called for efforts to ensure an increased oversight role of the House over the critical government programs like the wealth creation funds, as well as the implementation of the core projects.
She said that this would help ensure that the programmes benefit the intended persons. Among also wants more funds allocated to the government programmes that are aimed at improving the livelihoods of the households, as well as strengthening the implementation of programmes in strategic areas as provided under the fourth National Development Plan (NDPIV).
Of concern to her, was also the indiscipline that is usually exhibited by the government agencies, parliament and the ministry of finance regarding implantation of the budget.
She says there is need to ensure limits on how much the government can request in supplementary budgets and also ensure that such requests are made to cover unavoidable and emergency or unforeseen events.
This, she said, should be able to also ensure better debt accumulation and management.
The 2025/06 Budget kicks off the second half of the Vision 2040 and also the first of the five that will be used to implement NDPIV, as well as the Tenfold Growth Strategy for building a 500 Billion Dollar economy by 2040.
At least 16 Trillion Shillings is planned to go towards clearing and servicing Uganda’s indebtedness, both to domestic lenders and to foreign financiers.
According to the budget speech, Government has put in place a strategy to eliminate domestic arrears in three financial years starting with 2025/26, prioritizing suppliers of goods and services, contractors, and compensations for land and to war claimants.
Apart from increasing allocations to 1.4 Trillion Shillings, Matia Kasaija, the Minister of Finance, Planning and Economic Development, said the government will penalise accounting officers who lead to the accumulation of arrears, among other measures.
Domestic debt refinancing has been allocated 10.03 trillion, while debt repayment got 4.98 Trillion Shillings. A total of 493 Billion Shillings will go towards domestic debt repayment to the Bank of Uganda.
The total resource envelope is planned at 72.376 Trillion Shillings, with domestic revenue amounting to 37.55 trillion.
This includes 33.94 Trillion Shillings in tax revenues and 3.28 trillion non-tax revenue, while 328.6 billion will come from Local Government revenue.
The rest of the budget will be funded by 11.38 Trillion Shillings to be borrowed from domestic sources, while domestic refinancing of maturing domestic debt will amount to 10.03 trillion.
Other sources are expected to be grants and external borrowing for general budget financing, amounting to 2.08 trillion and external financing for projects, which should amount to 11.33 trillion, of which 2.8 trillion are grants.
Other utilisation of the resource envelope includes wages and salaries, with 8.57 trillion, non-wage recurrent expenditure, 28.33 trillion, which also includes operational funds for institutions, financing for all wealth creation funds, financing for science and technology investments, grants for education and health, medicines, maintenance of infrastructure, and interest payments, among others.
Kasaija also listed a number of measures aimed at achieving the financing strategy for next financial year, that included improving tax administration to raise an additional 1.89 Trillion Shillings and introduction of new tax measures to increase domestic revenue by 538.6 billion.
More resources are expected to be mobilised from the rationalisation of tax exemptions to eliminate inefficient ones, and repurposing resources in the outgoing budget from less productive to high-impact areas in line with the Tenfold Growth Strategy.
The government also plans to mobilise more concessional financing from international financial institutions such as the World Bank, the IMF, the African Development Bank, the Islamic Development Bank, and BADEA.
Other innovative sources for mobilising development finance will include Public Private Partnerships, climate finance, private equity, Sukuk bonds, Panda bond, diaspora bonds, among others, according to Kasaija.
An additional revenue of 538.6 Billion Shillings will be raised from new tax policy measures that were approved by Parliament. In addition to raising revenue, the measures will support the growth of businesses and the economy.
The economy’s output (GDP) is projected to grow by 7 percent next financial year, compared to 6.3 percent in 2024/25 and 6.1 last year, largely driven by agriculture, manufacturing, and services.