Traders in downtown Kampala. PHOTO | FILE
Uganda’s Ministry of Finance, Planning and Economic Development has projected that the country’s economy is expected to grow by at least 7 per cent during the 2025/26 financial year, and to double digits at the onset of oil and gas production.
While presenting the national budget for the financial year 2025/26 on June 12, 2025 at Kololo Independence Grounds, the Finance Minister, Mr Matia Kasaija said the projected growth conforms to the budget theme which is “Full Monetisation of Uganda’s Economy through Commercial Agriculture, Industrialisation, Expanding and Broadening Services, Digital Transformation and Market Access”.
Mr Kasaija said the size of the economy is projected to expand to reach Shs254.2 trillion (about $66.1 billion) in financial year 2025/26 and this will translate into a higher GDP per capita of $1,324 next financial year compared to $1,263 GDP estimated for this financial year ending June 30, 2025.
In nominal terms, Mr Kasaija said the size of the economy is estimated at Shs226.3 trillion, (about $61.3 billion) in the financial year 2024/25, rising from Shs203.7 trillion ($53.9 billion) in the financial year 2023/24. This is equivalent to $174.2 billion in Purchasing Power Parity terms.
“This growth was broad-based, including in agriculture, industry and services like ICT. This was on account of continued implementation of Government interventions, and sound fiscal and monetary policies that have supported private sector investment,” he said.
Adding: “The impressive economic performance has been driven by His Excellency the President’s commitment and deliberate investment in wealth creation initiatives. I thank His Excellency the President for setting the tone and for providing leadership and direction.”
Mr Kasaija said Uganda’s economy has strengthened its resilience to domestic and external shocks, and is estimated to grow by 6.3 percent this financial year 2024/25. This is after recording growth of 8.6 percent in the third quarter of this financial year. Last financial year 2023/24, the economy grew by 6.1 per cent.
Fiscal Performance
Mr Kasaija said revenue collection is projected at Shs31.9 trillion this financial year ending June 2025, equivalent to about 14.3 per cent of total domestic economic output or GDP. Total expenditure outturn is estimated at Shs51.53 trillion this financial year, excluding Bank of Uganda securities and domestic refinancing (debt rollover). The budget deficit is estimated at 7.6 per cent of GDP.
Mr Kasaija said the government plans to collect Shs37.2 trillion in domestic revenue next financial year 2025/26, of which Shs33.94 trillion will be tax revenue, Shs3.28 trillion non-tax revenue, and Shs328.6 billion local government revenue.
As a result, Mr Kasaija said this will finance about 60 per cent of the national budget. The rest of the budget will be financed through borrowing and grants. Grants and external borrowing for general budget financing total Shs 2.08 trillion; and External financing for projects is Shs 11.33 trillion of which Shs 2.8 trillion are grants.
Public expenditure
The public expenditure continues to be high. In the financial year 2025/26, Mr Kasaija said wages and salaries constitute Shs8.57 trillion of the total budget.
“Non-wage recurrent expenditure is Shs28.33 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,” he said.
Development expenditure, as used by the World Bank, refers to the portion of government spending aimed at promoting long-term growth and improvements in living standards. It encompasses investments in various sectors like education, healthcare, infrastructure, and research and development, all of which contribute to a country’s overall development.
Mr Kasaija said development expenditure totals Shs18.24 trillion and is to drive Uganda’s economic development while local government expenditure from own revenue is Shs328.6 billion.
By June 30, this year, a total of Shs3.3 trillion will have been transferred to the 10,589 parishes across the country, to transform the households still in subsistence to join the money economy.
Each parish gets Shs100 million per year. Government says so far, the PDM funds have reached 2.63 million beneficiaries in all districts and parishes across the country.
Mr Kasaija said the beneficiaries have invested 45 per cent of the money in cash and food crops such as maize, cassava, onions, bananas and Irish potatoes, 36 percent in livestock such as piggery, goats, beef cattle, dairy cattle and sheep, 12 per cent in poultry, and 6 percent in other enterprises.
He said these investments are changing the lives of Ugandans by boosting household incomes, enhancing food security and creating employment opportunities at local levels countrywide.
“I have provided an additional Shs1.059 trillion for the next financial year 2025/26 for further capitalisation of the PDM. This will avail an additional Shs 100 million per parish for households that have not yet benefited from PDM. The government has also provided money to pay for the bank charges to ensure that beneficiaries receive the full amount of Shs 1 million each.
Government is BUDGET SPEECH FINANCIAL YEAR 2025/26 13 also providing a grant of Shs 500,000 for persons with disability over and above the loan of Shs 1 million to cater for their additional access requirements.
The Financing Strategy for FY 2025/26
The financing strategy for next financial year includes improving tax administration to raise an additional Shs1.89 trillion.
Introduction of new tax measures to increase domestic revenue by Shs538.6 billion. Rationalising tax exemptions to eliminate inefficient ones that do not support industrial policy.
Repurposing resources in the budget for FY 2024/25 from less productive to high-impact areas in line with the Tenfold Growth Strategy. Mobilising more concessional financing from international financial institutions such as the World Bank, the IMF, the African Development Bank, the Islamic Development Bank, BADEA, among others.
The other one is mobilising development finance from other innovative sources, including Public Private Partnerships, climate finance, private equity, Sukuk bonds, Panda bonds, diaspora bonds, etc.
Public Debt
Mr Kasaija said the stock of public debt is projected at $31.5 billion, equivalent to Shs116 trillion, by the end of June 2025. Of this, external debt accounts for $15.49 billion, equivalent to Shs 56.3 trillion, and domestic debt $16 billion, equivalent to Shs 59.77 trillion.
“As a ratio of GDP, our public debt is estimated at 51.26 per cent, which is consistent with the Charter of Fiscal Responsibility,” he said.
Uganda’s debt is sustainable and is projected to remain so in the medium to long term. The debt has financed investments that support private sector growth by providing the requisite infrastructure.
Over the last 10 years, the areas which public debt has financed include integrated transport infrastructure (29.3 percent), electricity infrastructure including power generation plants and transmission lines (27.6 percent), water for production and consumption (11.5 percent), agro-industrialisation (5.1 percent), education and health (5 percent), housing and urban development (3 percent), and development of industrial parks (2 percent).
Mr Kasaija announced that to maintain public debt sustainability, the government is implementing domestic revenue mobilisation to increase revenue collection and reduce borrowing and mobilising more concessional financing from international financial institutions such as the World Bank, IMF, the African Development Bank, the Islamic Development Bank, and BADEA.
In addition to the above, the government will implement the Okusevinga initiative, where Ugandans will invest in government securities using mobile money.
[email protected]
