Uganda’s national budget for the Financial Year 2025/2026, weighing in at an unprecedented Shs72.3 trillion (approximately $19.5 billion USD), is more than just a fiscal statement; it’s a meticulously crafted strategy to propel the nation towards comprehensive socio-economic transformation. Unveiled by Finance Minister Matia Kasaija on Thursday, June 12, 2025, at Kololo Ceremonial Grounds, this budget is anchored in the overarching theme of “Full Monetisation of Uganda’s Economy through Commercial Agriculture, Industrialisation, Expanding and Broadening Services, Digital Transformation and Market Access.” This theme encapsulates the government’s ambition to transition a significant portion of the population from subsistence and informal activities into a more formalized, wealth-generating economy.
Let’s dissect the intricacies of this budget, exploring its financing, detailed allocations, economic outlook, and the direct implications for every Ugandan.
1. The Fiscal Tapestry: Size and Financing Mechanisms
The sheer magnitude of the Shs72.3 trillion budget marks it as one of Uganda’s largest to date. Understanding how this colossal sum will be raised and managed is crucial:
Domestic Revenue Mobilization (Shs37.2 trillion):
This is the bedrock of the budget, projected to finance approximately 60% of the total expenditure. The government is intensifying its Domestic Revenue Mobilization Strategy (DRMS) with a focus on:
- Widening the Tax Base: Bringing more economic activities and informal sectors into the tax net.
- Strengthening Tax Administration: Combatting smuggling, enhancing efficiency within the Uganda Revenue Authority (URA), and leveraging digital tools like the Electronic Fiscal Receipting and Invoicing System (EFRIS) to plug revenue leakages. URA is specifically tasked with collecting Shs37.3 trillion in domestic revenue.
- New Revenue Measures (Limited but Strategic): While major changes to tax rates are largely avoided to foster a stable environment, some strategic adjustments have been made:
- An export levy of $10 per metric tonne on wheat bran, cotton cake, or maize bran to encourage local value addition, particularly in animal feed production.
- A 1% fee on taxable items under the common external tariff, aligning Uganda’s policy with other EAC partner states.
- Reduced import duty on imported fabrics to $2 per kilogramme or 35% (whichever is higher), down from $3 per kilogramme, to support local textile value addition.
- A three-year income tax holiday for new citizen-owned businesses with investment capital under Shs500 million.
- Exemption from capital gains tax on transactions where an individual transfers an asset to a company they control.
- Removal of stamp duty on mortgages and agreements.
- Extension of the waiver period for interest and penalties outstanding as of June 30, 2024, provided the principal tax is paid by June 30, 2026.
Financing Gap (Borrowing and Grants):
The remaining 40% will be sourced from external borrowing (both concessional and non-concessional) and grants. This reliance on external financing, while necessary for ambitious development projects, also presents a challenge.
Public Debt & Sustainability:
The stock of Uganda’s public debt is projected to reach $31.5 billion (approximately Shs116 trillion) by the end of June 2025. This equates to about 51.26% of GDP. While the Ministry of Finance asserts that this debt remains sustainable in the medium to long term, supported by the Charter of Fiscal Responsibility, the cost of servicing this debt is substantial. A staggering 40.3% of domestic revenue for FY2025/2026 is earmarked for interest payments alone, amounting to roughly Shs9.61 trillion. This high debt service burden limits the discretionary funds available for direct service delivery and development interventions, underscoring the urgency of increased domestic revenue generation and prudent borrowing practices. The government aims to reduce domestic debt to minimize crowding out the private sector and will prioritize concessional loans externally.
2. Detailed Sectoral Allocations and Policy Focus
The budget’s thematic focus on “Full Monetisation” is reflected in its detailed allocations, strategically directed at areas with high economic and employment impact:
Human Capital Development (Shs11.44 trillion combined for Health, Education, Social Protection, Water & Sanitation):
- Health (Shs5.87 trillion): This significant allocation will focus on:
- Functionalizing Health Centre IVs across the country.
- Scaling up e-health systems (e.g., electronic medical record systems in National and Regional Referral Hospitals).
- Expanding and strengthening the National Ambulance and Emergency Care System.
- Ensuring adequate supply of essential medicines and healthcare supplies (e.g., Shs721 billion for National Medical Stores, including Shs100 billion for essential medicines, Shs116.8 billion for ARVs).
- Improving healthcare infrastructure and equipment, including the operationalization of oxygen plants and development of specialized cancer and cardiovascular care centers.
- Investing in preventive healthcare measures and deployment of Community Health Extension Workers.
- Education (Shs5.04 trillion): Priorities include:
- Supporting Universal Primary Education (UPE) and Universal Secondary Education (USE).
- Expanding the Higher Education Students’ Loan Scheme.
- Construction of new seed schools and improvements in existing infrastructure.
- Enhancing teacher recruitment, remuneration, and professional development.
- Digitizing school inspections to improve compliance with quality standards.
Wealth Creation Programs (Shs2.43 trillion for various initiatives):
These programs are designed to directly impact household incomes:
- Parish Development Model (PDM): Allocated Shs1.059 trillion for FY2025/2026, ensuring each parish receives Shs100 million annually. This model targets poverty eradication at the grassroots by providing seed capital for income-generating activities in agriculture, trade, and services. Over 2.6 million Ugandans have already benefited.
- Uganda Development Bank (UDB): Receives substantial capital (Shs1.45 trillion cumulative by end of FY2024/25) to provide affordable, long-term credit to strategic sectors, particularly manufacturing and agriculture.
- Emyooga (Shs553 billion cumulative): Supports various specialized enterprise groups at the constituency level.
- Youth Livelihood Programme (YLP) (Shs207.95 billion cumulative): Funds youth enterprises across sectors like agriculture, trade, and services.
- Uganda Women Entrepreneurship Programme (UWEP): Supports women’s group enterprises.
- Agricultural Credit Facility (ACF): Receives an additional Shs50 billion to boost agricultural financing.
Agro-Industrialization (Shs1.86 trillion):
This sector is key to the “monetisation” agenda:
- Funding for agricultural research and genetics development (e.g., anti-tick vaccine manufacturing facility at Nakyesasa, research in coffee by NaCORI).
- Expansion of irrigation schemes (145 solar-powered schemes completed, 157 more ongoing).
- Subsidized fertilizers and improved extension services.
- Emphasis on value addition for commodities like coffee, aiming to double export earnings.
Industrial and Energy Development (Shs875.8 billion):
- Focus on mineral-based industrial development.
- Continued funding for oil and gas projects, including the East African Crude Oil Pipeline (58% complete) and the planned 60,000-barrel-per-day oil refinery. Oil production is expected to begin in 2026, projected to generate annual revenues of $1 to $2.5 billion.
- Investment in reliable and affordable electricity supply to support industrial growth.
Infrastructure (Transport Sector – over Shs6 trillion combined for roads and rail):
- Roads (Shs2.2 trillion): Continued investment in upgrading and maintaining the road network to reduce transport costs and enhance market access.
- Standard Gauge Railway (Shs2.175 trillion): Development of a modern railway network for efficient movement of goods and passengers, crucial for regional trade.
Tourism (Shs430 billion directly, plus Shs2.2 trillion indirectly through infrastructure):
Aims to position Uganda as a competitive MICE (Meetings, Incentives, Conferences, and Exhibitions) destination, capitalizing on recent successes where Uganda now ranks 7th in Africa for MICE tourism. This includes investments in tourism infrastructure, ICT, and security.
3. Economic Outlook and Macroeconomic Stability
The budget forecasts a robust economic performance:
- Projected Economic Growth: The economy is projected to grow by 7.0% in FY2025/2026, building on 6.4% in FY2024/2025 and 6.1% in FY2023/2024. This growth trajectory is anticipated to accelerate to double digits upon the commencement of oil and gas production.
- Economic Size: The size of the economy is expected to expand to Shs254.2 trillion (approx. $66.1 billion) in FY2025/2026, up from an estimated $61.3 billion in FY2024/2025.
- GDP Per Capita: Projected to increase to $1,324 in FY2025/2026, from $1,263 in the current fiscal year, moving Uganda closer to the lower-middle-income status.
- Long-Term Vision: The budget aligns with the Fourth National Development Plan (NDP IV) and the “Tenfold Economic Growth Strategy,” which aims to expand Uganda’s economy to an ambitious $500 billion by 2040.
- Inflation: Annual inflation reduced to 2.9% in November 2024, below the policy target of 5%, supported by increased agricultural production and coordinated monetary and fiscal policies.
4. Direct Implications for Your Future
The detailed provisions of this budget directly influence the daily lives and long-term prospects of Ugandans:
- For Households: The PDM provides a direct lifeline for poverty eradication and income generation at the grassroots level. Improved access to healthcare and education services will enhance the quality of life. The focus on preventive healthcare and emergency response means better health outcomes for communities.
- For Farmers: Significant investments in agro-industrialization, including research, irrigation, and value addition, offer greater opportunities for increased yields, better market prices, and diversification of income. The Agricultural Credit Facility provides essential financial support.
- For Entrepreneurs & SMEs: Access to affordable capital through UDB and other wealth creation programs is crucial for starting and expanding businesses. Improved infrastructure will reduce operational costs and expand market reach. The tax holidays for new citizen-owned businesses aim to spur entrepreneurship.
- For Professionals & Job Seekers: Economic growth in key sectors like oil and gas, manufacturing, and services will create new employment opportunities. Investments in skills development and education will prepare the workforce for these emerging sectors.
- For Investors: The emphasis on industrial parks, improved infrastructure, and a focus on key growth sectors (Agro-industrialization, Tourism, Mineral development, Oil & Gas, Science, Technology, and Innovation – “ATMS” sectors) signals a conducive environment for both domestic and foreign direct investment. However, the budget’s relatively modest direct allocation to manufacturing and tourism (less than 1% each of the total budget), compared to infrastructure and human capital, means that investors in these areas might still rely on indirect benefits from the overall economic growth.
- Fiscal Responsibility: While the budget paints an optimistic picture of growth, the rising debt servicing costs require careful monitoring. Citizens and businesses will need to contribute through taxes, and the government’s commitment to efficient use of funds and combating corruption will be paramount to ensure that the allocated resources translate into tangible development outcomes.
In essence, Uganda’s Shs72.3 trillion budget for FY2025/2026 is a bold statement of ambition, aiming to leverage the nation’s resources and potential to foster widespread wealth creation and economic modernization. It’s a journey from resilience to acceleration, and every Ugandan, through their contribution and participation, plays a crucial role in realizing this vision for a prosperous future.
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