The first four months of the 2025/26 financial year tell a clear and compelling story about the economic position, one marked by tightening revenue flows, rising expenditure commitments, and a growing deficit that has steadily widened with each passing month.
Ministry of Finance Performance of Economy Reports tell the story of a government struggling to spend within its means, but has failed in the period between July and October due to rising funding pressures.
The financial year began in July with a sense of cautious optimism. Revenue performance, at 99.3 percent of target, suggested that collections were broadly on course.
Government mobilised Shs2.53 trillion, driven mainly by strong direct domestic taxes.
Yet even at this early stage, cracks had begun to appear. Weaknesses in indirect taxes and international trade taxes signaled that consumption and import activity were softer than anticipated.
Meanwhile, government spending surged to Shs3.61 trillion, driven by early-year commitments, including public sector wages, transfers to agencies, and operational costs.
July closed with a significant deficit, but hopes remained that performance would improve as the year progressed.
August, however, brought a much sharper revenue setback. Collections fell to Shs2.59 trillion, far below the month’s target.
Government did not just miss projections; it underperformed across nearly every revenue category.
At the same time, expenditure remained high at Shs3.14 trillion, reflecting ongoing obligations that could not be paused simply because revenues faltered.
The deficit widened further, signalling that the fiscal strain was deepening rather than easing.
September reinforced this trend. Revenues ticked up slightly to Shs2.61 trillion, but still failed to match the pace of spending, which stood at Shs3.12 trillion.
Administrative fees and licenses, a crucial component of non-tax revenue, posted especially weak results as collections from immigration, transport, and court-related activities lagged.
Once again, expenditure outpaced income, and the cumulative deficit crept higher. By October, the pattern had hardened into a structural challenge rather than a temporary blip.
Revenue collections dropped slightly to Shs2.57 trillion, with shortfalls arising from payroll transition obstacles, lower interest rates affecting treasury bill earnings, and subdued excise receipts from beer, soft drinks, and telecom services.
Meanwhile, government spending rose to Shs3.27 trillion, partly due to higher-than-planned grants and increased procurement of goods and services.
The result was yet another month where the gap between what government earned and what it spent grew wider.
Taken together, the cumulative picture from July to October tells a story of mounting fiscal pressure. Across the four months, total revenues amounted to Shs10.32 trillion, while total expenditures reached Shs13.16 trillion.
This left Uganda with a cumulative fiscal deficit of Shs2.84 trillion, a gap that reflects not only revenue weaknesses but also the rigidity of government spending.
The underlying message is unmistakable: the government’s obligations have continued to grow even as revenue performance has softened.
Weak consumption patterns, administrative challenges, and lower receipts from key tax handles have constrained collections.
At the same time, essential government expenditures, salaries, service delivery, debt refinancing, and transfers to local governments, have pressed forward unabated.
By the end of October, the country found itself at a crossroads. The widening deficit underscored the urgent need to strengthen revenue mobilization efforts, tighten expenditure controls, and ensure that fiscal policy remains on a sustainable trajectory.
The story of July to October is not just about shortfalls; it is about the broader pressures weighing on the treasury and the choices that lie ahead for policymakers seeking to restore balance in the months to come.