East Africa’s FY2026/27 budgets read like a region trying to walk two tightropes at once: keeping growth engines running while making sure debt does not pull the plug. Across all seven East African Community member states the fiscal story is the same dilemma expressed with different numbers.
Young populations are demanding schools, hospitals and jobs. Yet creditors are demanding interest payments on time. New geopolitical shocks mean governments can no longer borrow without thinking carefully about the cost.
That tension runs through every budget tabled by Uganda, Kenya, Tanzania, Rwanda, Burundi, DR Congo and South Sudan. The headline across the region is fiscal consolidation, but the details show each country placing a different bet on what will pull it forward.
Resource envelopes
Uganda’s FY2026/27 budget is about managing the wait for oil while holding the line on discipline. The budget is pitched at about Shs84 trillion, roughly $22.8 billion, a 13 percent rise year on year. Earlier drafts had cut spending by 4.1 percent to Shs69.4 trillion to reduce borrowing and ease interest pressure.
That back and forth captures Uganda’s core tradeoff between immediate needs and long-term stability. The government is channeling money into infrastructure tied to the East African Crude Oil Pipeline and related fuel lines.
Once production starts, GDP growth is expected to push above 7 percent. But debt service already consumes close to 40 percent of the budget, so domestic borrowing is being scaled back to free space for private credit. Tax policy is being reworked to broaden the base and scrap exemptions that yield little in return.
Compliance enforcement is getting tougher. The official narrative is economic transformation through agriculture, mining, oil, tourism and technology, but it is tempered by fiscal caution. Uganda’s EAC contribution rises to $7.3 million, matching Rwanda.
Mr Aly-Khan Satchu, Sub-Saharan Africa Geoeconomic Analyst, views Uganda’s move as strategic.
‘Uganda and Tanzania appear to be trimming their cloth to suit these new uncertain times ahead of what I expect to be a significant growth spurt in the medium term,’ he says. ‘The overarching point is extreme global geopolitical volatility and headwinds and a significant risk around deficit funding.’ In short, cut now to expand later when oil revenues land.
Kenya is taking the opposite tack. Parliament approved a KSh4.7 trillion framework, up KSh435.7 billion from the previous year. The national government receives KSh2.878 trillion while counties get KSh420 billion plus KSh75.69 billion in equitable share. Education received the biggest boost, with KSh64.2 billion more for teachers, universities and Competency Based Curriculum reforms.
Total education allocation now hits KSh767.3 billion, keeping it at about 28 percent of the budget. Infrastructure is second. Roads, rail, housing and metropolitan projects received KSh59.9 billion extra. The Affordable Housing Programme retains KSh139.3 billion after a KSh25 billion top up. Health stays central at KSh167.4 billion for Social Health Authority enrollment and vaccines. Security remains heavy with police at KSh143.19 billion and defense at KSh241.36 billion.
The cost of this approach is fiscal stretch. The deficit widens to 5.3 percent of Gross Domestic Product (GDP) from 4.7 percent. Financing needs KSh99.5 billion externally and KSh1.01 trillion domestically. Interest payments are now above 25 percent of the budget, squeezing county allocations and other services.
Kenya also faces the steepest EAC bill at $11.6 million. Satchu is blunt on Kenya’s position: ‘Kenya remains challenged by the debt service load and has apparently hit a wall on the tax side which makes the situation a little precarious.’ The bet is that investments in education and housing create jobs fast enough to offset the debt load.
Tanzania’s TSh61.9 trillion budget, about $21.7 billion, represents a 9.7 percent increase. The Office of the Prime Minister is seeking TSh12.5 trillion, with TSh8.7 trillion for recurrent costs and TSh3.7 trillion for development. The priority stack puts energy security at the top, followed by health and education.
The logic is simple: reliable power unlocks industry and private investment. Domestic revenue mobilization is the other pillar, targeting TSh46.37 trillion from taxes and non-tax sources.
Regional and local governments are expected to collect TSh2.41 billion, pushing decentralization and accountability closer to citizens. Tanzania avoids Kenya-style deficits, relying instead on better collection and administrative reform. Its EAC contribution is $8.2 million, second only to Kenya.
Satchu groups Tanzania with Uganda as countries trimming cloth ahead of growth. The risk is whether domestic revenue can truly replace donor money without slowing private activity or forcing new taxes that hurt consumption.
Rwanda’s 2026/2027 budget, presented by the Minister of Finance and Economic Planning Yusuf Murangwa, includes a total budget of Rwf7.8 trillion. That reflects an increase of Rwf844.2 billion from the previous budget for FY2025/26. The budget aims to support implementation of the National Strategy for Transformation while maintaining public debt at sustainable levels.
‘The increase in expenditure is expected to support strategic sectors including infrastructure development, education, healthcare, agriculture, social protection and job creation, in line with the country’s National Strategy for Transformation,’ Murangwa noted.
Financing will come from a mix of domestic revenues, external grants and loans, with emphasis placed on improving tax collection and using public resources more efficiently. Toward the EAC integration agenda, Rwanda’s contribution is $7.3 million, same as Uganda.
Satchu adds: ‘Of all the EAC countries, Rwanda is the best organised with the most efficient overall governance structure.’ The test is whether efficiency can deliver results with a smaller fiscal envelope compared to its larger neighbours.
DR Congo’s budget has to take course despite the Ebola outbreak testing resilience. In the next financial year 2026/2027, the state budget was revised upward to $21.9 billion from $20.3 billion. Security tops the resource allocation list because of conflict in the east.
Infrastructure and agriculture are stated priorities because roads and farm output are critical for a vast country with weak connectivity. In practice, instability limits delivery and social services receive less than planned.
The four-year-old EAC member state plans to set aside $5.9 million, reduced because it is a serial defaulter with tight fiscal space.
Satchu calls DR Congo ‘an interesting play sitting at the intersection point of the new AI economy,’ pointing to its mineral wealth that powers batteries and technology. For now, conflict means long-term development goals stay secondary to immediate stability.
Burundi’s 2025/26 budget is Bf5.2 trillion, about $1.77 billion. Figures for 2026/27 are not out yet, but priorities remain infrastructure, agriculture, and basic social projects. Roads and farm productivity matter because most people depend on subsistence farming and connectivity is weak.
Under the new EAC formula, Burundi’s contribution drops to $4.5 million. The relief is meant to improve compliance and keep the country engaged regionally while focusing domestic cash on stability and essential services.
South Sudan’s 2026/27 budget is $87 million are pending. The budget is dominated by public sector wages and debt service tied to oil-backed loans and arrears. Infrastructure is a priority on paper, but receives little resources after recurrent costs are met.
The budget depends heavily on oil prices and donor support, making it vulnerable to external shocks. EAC contributions fall to $5.2 million, reducing default risk but also regional influence. Satchu is harsh in his assessment: ‘South Sudan is the least and has mortgaged the future.’
Private sector retorts
The business community’s verdict is consistent across the region. Priorities are right, execution is not.
Mr.Ahmed Farah, EABC executive director, says: ‘The East African private sector welcomes the EAC Budget Estimates where they prioritise infrastructure, energy, agriculture, value addition, skills and digital transformation. These are the foundations for trade, jobs and improved livelihoods. We, however, must move from budget allocations to implementation. This has been the challenge.’
Farah lists what businesses actually need: lower transport and energy costs, faster border clearance, predictable taxes, affordable credit and fewer non-tariff barriers.
He warns that rising debt service and domestic borrowing must not crowd firms out of capital, ‘especially MSMEs.’ That implementation gap is the region’s recurring theme. Budgets can list Bugesera Airport or oil pipelines, but if non-tariff barriers remain and credit stays expensive, growth stalls.
Pattern
Four patterns stand out across the seven budgets. First, human capital is the consensus. Education and health rank in the top three sectors for everyone except DR Congo and South Sudan, where security and wages take precedence.
Kenya protects education despite cuts elsewhere. Uganda and Tanzania list it prominently. Rwanda uses agriculture and job creation as human capital investment. The driver is demographics. East Africa is young and competitiveness depends on skills and health.
Infrastructure is the growth bet but focus varies by country. Uganda and Tanzania target energy and oil transport to unlock production. Kenya bets on roads, rail and housing to manage urbanization. Rwanda builds an airport and expands power to become a logistics hub. Even Burundi and DR Congo put infrastructure first because poor connectivity blocks trade. Capacity to deliver differs, but agreement on importance is unanimous.
Debt is forcing consolidation. Uganda’s budget is heavily influenced by debt servicing costs projected to consume over Shs33.4 trillion to control interest. Kenya accepted a wider deficit but is near limits.
Tanzania leans on domestic revenue to avoid new borrowing. This marks a shift from deficit-financed expansion in the early 2020s to caution. The risk is slower service delivery amid rapid population growth. The alternative, unsustainable debt, is now seen as worse for long-term stability.
Monetary Union
Layered on top of national budgets is a reset for the East African Community itself. From July 1 2026, EAC contributions will shift from equal splits to a formula-based 50 percent on equality and 50 percent on GDP per capita. Kenya’s bill jumps 67 percent to $11.6 million.
Burundi and South Sudan get relief under the new formula. The idea is to improve compliance and build a community that functions better.
Experts say whether national budgets align with that goal will depend on how much fiscal space each government has after meeting domestic obligations.
That divergence also explains why deeper integration remains stuck. On the delayed implementation of the Monetary Union and a single currency, Satchu was direct: ‘Currency project is for now a pie in the sky thing. There needs to be considerably more fiscal convergence amongst member countries and there has been divergence, and interest rate policies are too far apart. If it was in place it would work like the Euro, but we are very far away.’
The budgets themselves show why. With debt service, deficits and monetary policy moving in different directions, the conditions for a shared currency do not yet exist. For now, national priorities will continue to override regional monetary ambitions.
East Africa FY2026/27 budget snapshot
Country
Budget Envelope FY2026/27
Key Priorities
Main Funding Sources
EAC Contribution
Uganda
Shs84.3 trillion /
$22.8 billion
Oil infrastructure, agriculture, mining, tourism, technology, debt control Domestic revenue, reduced domestic borrowing
Domestic revenue, reduced domestic borrowing, oil future revenues
$7.3 million
Kenya
KSh4.7 trillion/
$36.3 billion
Education, affordable housing, infrastructure, health, security
Domestic borrowing KSh1.01T, external borrowing KSh99.5B, taxes $11.6 million
$11.6 million
Tanzania
TSh61.9 trillion / $21.7 billion
Energy security, health, education,
Domestic revenue mobilization Tax and non-tax revenue TSh46.37T, local collections
$8.2 million
Rwanda
Rwf6,952.1 billion /$5.75 billion
Bugesera Airport, electricity, agriculture, jobs, governance, digital courts
Domestic revenue, performance-based decentralization funds
$7.3 million
DRC
$21.3 billion
Security, infrastructure, agriculture, rural connectivity
Domestic revenue
Constrained by conflict and defaults $5.9 million
Burundi
Bf5.2 trillion / $1.77 billion
Infrastructure, agriculture, basic social development
Domestic revenue
Reduced EAC burden $4.5 million
South Sudan
$87 million
Wages, debt service, limited infrastructure Oil revenues
Donor support
$5.2 million