KAMPALA, Jan 29 – Uganda plans to sharply reduce external budget support in its next financial year starting in July, as the government looks to rely more on local revenue and slow the pace of new borrowing.
The Ministry of Finance said external budget support, which usually comes as loans and grants, is projected to fall to 330.9 billion Ugandan shillings ($92.7 million). That would be an 84.2% drop from about 2.1 trillion shillings in the current period, according to a ministry post on X late Wednesday.
The ministry did not give a reason for the cut. However, it said the government is focused on strategies that raise domestic revenue collection in the new fiscal year.
Domestic revenues in the 2026/27 financial year are projected to rise 9% to 40.1 trillion shillings, the ministry said as higher collections would help fund spending while reducing the need for budget support from abroad.
At the same time, Uganda plans to trim domestic debt issuance next year by 21.1% from the previous period, as it tries to contain public debt and ease pressure on interest costs. A budget paper seen by Reuters in December put planned issuance of Treasury bills and bonds at 9 trillion shillings for 2026/27, down from 11.4 trillion shillings in the prior year.
Interest payments are projected to absorb nearly a third of domestic revenues in 2026/27. Public debt rose to 51% of gross domestic product in the year to June, from 46.8% a year earlier, and total public debt stood at $32.3 billion as of June.
Meanwhile, the government expects growth to strengthen as Uganda prepares to start crude oil production later this year, a milestone officials say should widen the tax base over time.
