Kampala, Uganda | Uganda will spend more than Shs16 trillion on debt repayment and interest obligations in the 2026/27 financial year as the country’s public debt stock climbs to Shs117.3 trillion, according to the national budget presented by Finance Minister Henry Musasizi on Thursday.
The growing debt burden emerged as one of the key highlights of the Shs84.39 trillion budget, with debt servicing taking an increasingly significant share of public expenditure amid government’s continued push for economic transformation through infrastructure development, industrialisation and wealth creation programmes.
Presenting the budget at Kololo Independence Grounds, Musasizi said Uganda’s economy remains resilient despite global economic uncertainties and is projected to grow by 10.2% in the 2026/27 financial year, up from an estimated 6.4% this year. He attributed the projected growth to increased investments, rising exports and the anticipated commencement of commercial oil production later this year.
According to the minister, Uganda’s total public debt stood at Shs117.3 trillion (USD 32.5 billion) by the end of March 2026. While acknowledging the increase, he maintained that the debt remains sustainable and has largely financed productive investments in roads, energy infrastructure, education, health services and other strategic sectors intended to stimulate long-term economic growth.
Government is banking heavily on the oil and gas sector to ease future fiscal pressures. Commercial oil production, expected to begin later this year, is projected to boost export earnings, government revenues and foreign exchange inflows while creating thousands of jobs directly and indirectly across the economy.
The budget outlines Government’s continued commitment to wealth creation as a key strategy for raising household incomes. A total of Shs2.49 trillion has been allocated to wealth creation interventions, including the Parish Development Model (PDM), Emyooga, agricultural financing programmes and support for small businesses.
Government reported that since the rollout of the PDM, more than Shs4.4 trillion has been disbursed to over 10,500 parishes across the country, benefiting more than four million Ugandans. Officials say the focus is now on ensuring that beneficiaries invest the funds in productive enterprises capable of generating sustainable incomes and employment.
Transport infrastructure remains one of the largest beneficiaries of government spending, receiving Shs8.79 trillion. The funds will support the construction and rehabilitation of roads and bridges, development of the Standard Gauge Railway, airport upgrades, expansion of Uganda Airlines and improvements in water transport infrastructure. Government argues that improved connectivity is critical for reducing the cost of doing business and enhancing market access.
The education sector received Shs6.66 trillion to support universal education programmes, teacher recruitment, school infrastructure development and technical and vocational training. Government also allocated Shs568.65 billion for salary enhancement of primary school and arts teachers.
The health sector was allocated Shs5.23 trillion to support recruitment of health workers, procurement of medicines, upgrading health facilities and strengthening specialised healthcare services. Officials say the investment is aimed at improving access to quality healthcare and reducing preventable deaths.
Agriculture, which remains the backbone of Uganda’s economy, received Shs2.26 trillion to support commercial farming, irrigation, extension services, agro-processing and value addition. Government says increasing agricultural productivity remains one of the most effective pathways for reducing poverty and improving household incomes.
The energy sector was allocated Shs2.07 trillion to finance electricity generation, transmission and rural electrification projects. Meanwhile, science, technology, innovation, ICT and creative industries received Shs1.14 trillion, while mineral development and oil and gas activities were allocated Shs473.5 billion.
Security, governance and justice institutions received Shs10.21 trillion to support the operations of the Uganda People’s Defence Forces, Uganda Police Force, Uganda Prisons Service, the Judiciary and anti-corruption agencies. Government maintains that peace, security and the rule of law remain essential for attracting investment and sustaining economic growth.
Government also pledged to continue cattle restocking programmes in the Lango, Acholi and Teso sub-regions as part of efforts to restore livelihoods and support communities that lost livestock during past conflicts and cattle raids.
To finance the budget, Government projects domestic revenue collections of Shs45.96 trillion. The minister attributed the projected increase to improved tax administration, expansion of economic activity and ongoing digitalisation of revenue collection systems. However, borrowing will continue to play a role in financing development projects and budget priorities.
In a bid to strengthen fiscal discipline, Government announced several expenditure-control measures, including the suspension of state-funded public holiday celebrations except for religious functions. The minister also pledged stronger accountability mechanisms, stricter budget discipline and intensified efforts to combat corruption.
The 2026/27 budget comes at a critical moment as Uganda seeks to balance ambitious development spending with a rapidly growing debt burden. While Government remains optimistic that oil revenues, industrialisation and export growth will accelerate economic transformation, economists say prudent borrowing, efficient implementation of programmes and stronger domestic revenue mobilisation will be crucial in ensuring that growth translates into jobs, higher incomes and improved living standards for ordinary Ugandans.
