The National Budget Framework Paper for FY2026/27-FY2030/31, the preliminary projection by the Finance Ministry reveals that the size of budget for FY 2026/27 will amount to Shs69.399 trillion. This implies that the government is reducing the budget by Shs2.977 trillion from Shs72.376 trillion of the current FY 2025/26 as it tries to curb the trend of increasing public expenditure.
The Finance Ministry explains that the forthcoming Budget will be financed using both the domestic and external resources. As official development Assistance keeps on dwindling globally, regionally and nationally; it has become clear that raising domestic revenue is important for financing the National Budget because it ensures self-sustainability, reduces government dependence on external aid and debt, and strengthens democratic accountability.
As such, the Finance Ministry says in the Financial Year (FY) 2026/27, domestic revenues are projected to amount to Shs40.090 trillion, up from an estimate of Shs37.227 trillion in FY 2025/26. In the National Budget Framework Paper for FY2026/27-FY2030/31 the Finance Ministry says this translates into nominal growth in revenues of Shs2.863 trillion.
‘This rise is attributed to gains on account of higher economic growth, a widening tax base, improved administrative tax revenue collection measures, as well as reforms in non-tax revenue collection,’ the Finance Ministry says in the National Budget Framework Paper for FY2026/27-FY 2030/31.
Domestic borrowing
Domestic borrowing is projected at Shs8.953 trillion in FY 2026/27 from Shs11.381 trillion in FY 2025/26, and will continue on a declining trend over the medium term to ensure fiscal and debt sustainability.
This reduction reflects the Government’s intention to avoid crowding out of the private sector, curb the rising debt-to-Gross Domestic Product (GDP) ratio, and address the growing burden of interest payments relative to revenues. It also follows the phasing out of certain one-off expenditures. By June 2025, the debt-to-GDP ratio had reached 51 percent, exceeding the 50 percent ceiling set in the Charter for Fiscal Responsibility. Simultaneously, the cost of debt has risen sharply.
Interest payments already accounted for 26.2 percent of revenues in FY 2024/25, and this is projected to climb to 30.2 percent by FY 2026/27. ‘Sub-Saharan Africa’s median interest- to-revenue ratio is just 12 percent. Such elevated debt service burdens shrink fiscal space, leaving fewer resources available for discretionary spending in high-multiplier, growth enhancing sectors,’ the Finance Ministry said in the National Budget Framework Paper for FY2026/27-FY2030/31.
Similarly, the Finance Ministry states that Budget financing (support) has reduced by Shs1.753 trillion, from Shs2.084 trillion to Shs0.331 trillion. Over the medium term, it is being anticipated by the Finance Ministry that domestic revenues will increase, driven by continued growth in line with the Tenfold Growth Strategy.
Government expenditure
The National Budget Framework Paper for FY2026/27-FY2030/31 shows that government expenditure and net lending in FY2026/27 are projected to amount to Shs54.013 trillion. This is slightly less than Shs56.541 trillion in the approved Budget for FY 2025/26.
External borrowing
The Finance Ministry says net external financing is projected to amount to Shs4.044 trillion in FY2026/27, a decline from Shs5.679 trillion in the approved Budget for FY 2025/26. On the other hand, total project loans are estimated at Shs8.877 trillion, of which Shs2.949 trillion will be attained under concessional terms.
Debt repayments
External debt repayments (amortisation) are projected to amount to Shs4.833 trillion in FY 2026/27, compared to Shs4.986 trillion in the approved Budget for FY 2025/26. ‘Over the medium term, external debt payments are projected to increase owing to the existing debt payment profile. Going forward, government’s financing strategy is to reduce borrowing on commercial terms and focus more on concessional borrowing,’ the Finance Ministry said.
Interest payments
Interest payments are projected to amount to Shs12.735 trillion, equivalent to 4.4 percent of GDP. Of this, Shs10.716 trillion is projected for domestic interest payments while the remaining amount, equivalent to Shs2.019 trillion, will be foreign interest payments and commitment fees. Over the medium term, interest payments are projected to average 4.2 percent of GDP. The theme of the NBFP for FY 2026/27 is: ‘Full Monetisation of Uganda’s Economy through Commercial Agriculture, Industrialisation,
Expanding and Broadening Social Services, Digital Transformation and Market Access.’ The Finance Ministry says the NBFP is consistent with the Fourth National Development Plan (NDP IV) for the period FY 2025/26 to FY 2029/30 as well as the Charter for Fiscal Responsibility, and satisfies the requirements of gender, equity responsiveness and balanced development. The FY 2026/27 National Budget Framework Paper (NBFP) marks the second year of implementing the NDP IV and the tenfold growth strategy.