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Where will the Shs72.3t come from?
National Budget. PHOTO/COURTESY
What you need to know:
Sustained domestic revenue mobilisation is crucial for developing countries to finance economic growth, achieve their development priorities, and build resilience to climate shocks among key strategic priorities
Governments around the world finance their national budgets through a combination of revenue generation and borrowing. Revenues to finance typically come from taxes, such as income tax, corporate tax, and sales tax, as well as fees and fines.
Sustained domestic revenue mobilisation is crucial for developing countries to finance economic growth, achieve their development priorities, and build resilience to climate shocks among key strategic priorities. The Ugandan government has made a budget of Shs72.137 trillion for the fiscal year 2025/2026, which comprises domestically generated revenue through taxes and borrowing.
The breakdown of the budget is as follows: The budget committee of Parliament states in their report that on January 27, Parliament approved the second Charter for Fiscal Responsibility (CFR) for the period Financial Year 2021/2022-FY 2025/26. The CFR presents the following Government's fiscal policy objectives to support the socio-economic transformation agenda while ensuring macro-economic stability and fiscal sustainability during the period, Financial Year 2021/2022-FY 2O25/2026. Uganda has continued to receive budget support from the development partners in the form of grants and loans. The MFPED says the budget support (Grants and Loans) for the Financial Year 2025/26 totals Shs2.084 trillion.
The government says Domestic Financing (Domestic Borrowing) for the 2025/2026 financial year totals Shs11.381T, despite fears that huge borrowing could lead to crowding out the private sector since the banks prefer investing in government securities because they deem it as risk-free. Similarly, the government plans to execute Domestic Debt Refinancing (Roll-over) totalling Shs10.027 trillion for the fiscal year 2025/26. The government officials argue that this is typically done to manage the government's debt portfolio, address refinancing risks, and potentially lower borrowing costs. Every year, the government has several projects to be undertaken by Ministries, Departments, and Agencies. In the FY 2025/2026, the MFPED says Project Support (Grants and loans) is Shs11.327 trillion.
1962
Domestic Revenue comprising tax/ non-tax revenue totalling Shs37.227 trillion, which is the highest target the government of Uganda has ever planned for since the country gained its independence in 1962. The Ministry of Finance, Planning and Economic Development (MFPED), and other government officials are arguing that this is in line with the policy of increasing domestic revenue.
