Africa-Press – Uganda. Uganda’s preliminary budget framework for the Financial Year 2026/27 signals a tighter fiscal stance, with the overall resource envelope shrinking as government moves to strengthen domestic revenue mobilisation and rein in borrowing.
According to the Budget Framework Paper, the resource envelope for FY2026/27 is estimated at Shs 69.399 trillion, down from Shs 72.376 trillion in FY2025/26. Government says the contraction reflects a deliberate policy shift aimed at consolidating public finances while safeguarding macroeconomic stability.
Despite the reduced budget size, domestic revenue collections are projected to increase significantly. Government expects to raise Shs 40.090 trillion in FY2026/27, up from Shs 36.806 trillion in the current financial year. This growth is anchored in efforts to improve tax compliance, enhance administrative efficiency, and broaden the tax base.However, discretionary funding available to government—after factoring in arrears clearance, interest payments, and domestic debt repayments—is expected to decline. Net discretionary resources are projected at Shs 31.059 trillion in FY2026/27, compared to Shs 32.480 trillion in FY2025/26, underscoring the increasing pressure of debt servicing on the national budget.
Government also plans to scale back domestic borrowing. Domestic borrowing for FY2026/27 is projected at Shs 8.952 trillion, down from Shs 11.381 trillion in the current financial year. Domestic debt refinancing is similarly expected to decline slightly to Shs 9.68 trillion, from Shs 10.028 trillion in FY2025/26.
On the external financing front, the contraction is even more pronounced. External budget financing is projected to fall sharply from Shs 2.084 trillion in FY2025/26 to Shs 330.97 billion in FY2026/27. External project financing is also expected to decline to Shs 10.018 trillion, from Shs 11.327 trillion in the current year.
Government notes that the FY2026/27 budget will continue to be financed through a mix of domestic and external sources, including tax revenues, loans, and grants. Borrowing, however, will be more selective, with a strong preference for concessional financing, particularly to support social sector investments such as health, education, and social protection.For major infrastructure projects, authorities plan to adopt innovative financing mechanisms with competitive terms, prioritising investments that generate high economic returns and support long-term growth.
Within the constrained fiscal framework, government also intends to re-prioritise expenditures to improve allocative efficiency, ensuring that limited resources are directed toward programmes with the greatest impact on economic transformation and service delivery.
At the same time, efforts will be intensified to boost domestic revenue mobilisation and attract higher levels of foreign direct investment, which government views as critical to sustaining growth while reducing reliance on debt.
To support these measures, authorities reaffirmed their commitment to maintaining sound fiscal and monetary policies aimed at preserving macroeconomic stability, strengthening investor confidence, and improving Uganda’s credit ratings over the medium term.
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