Uganda has announced a significant reduction in public spending and domestic borrowing for the 2026/27 financial year, as the government moves to stabilise its finances amid rising debt and high interest costs.
Fiscal tightening plan
The Ministry of Finance confirmed that expenditure will be cut by 4.1%, bringing the total budget down to 69.4 trillion Ugandan shillings (about $19.9 billion) from 72.4 trillion in the current year. Domestic borrowing through Treasury bills and bonds will fall by more than 21%, to 9 trillion shillings. Officials say the measures are designed to ease debt sustainability concerns and curb the growing share of revenue consumed by interest payments.
Rationale behind the cuts
Uganda, like many Sub-Saharan African economies, has faced mounting pressure from expensive borrowing and weak fiscal space. By reducing reliance on domestic debt, the government hopes to improve investor confidence and redirect funds toward productive areas of the economy. Analysts, however, warn that tight budgets could restrain growth if investment in public services or infrastructure is delayed.
Investment priorities maintained
Despite the austerity measures, Uganda intends to safeguard funding for major infrastructure and resource projects. These include the East African Crude Oil Pipeline, a new oil refinery, expanded mineral exploration in copper, gold and iron ore, and the standard-gauge railway initiative. Authorities argue these projects are vital to generating long-term revenues that can ease fiscal pressures in the future.
Regional context
Uganda’s decision mirrors broader trends across Africa. Nigeria, Kenya and South Africa have also faced rising finance costs, with Moody’s warning this week that high debt servicing burdens and weak policy frameworks are weighing on growth prospects. Across the continent, governments are being forced to choose between fiscal consolidation and sustaining development spending.
Implications for investors and citizens
For investors, Uganda’s move may signal a stronger commitment to debt discipline, potentially lowering future borrowing costs. For citizens, however, there is a risk that spending cuts could affect social programmes or delay improvements in essential services. The balance between austerity and growth will remain the key challenge as the government enters the next fiscal year.
Newshub Editorial, 18 September 2025
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