The Ministry of Finance projects that domestic revenue in the 2026/27 financial year will amount to Shs40.09 trillion, up from an estimated Shs37.23 trillion in the current financial year.
This represents a nominal increase of Shs2.86 trillion, driven by higher economic growth, a widening tax base, improved tax administration, and reforms in non-tax revenue collection.
The Ministry of Finance says domestic revenue is expected to rise significantly over the medium term, supported by continued economic expansion in line with the Tenfold Growth Strategy, the introduction of new tax policy measures, enhanced tax administration, higher compliance levels and stronger accountability for tax incentives.
The projections also cite the elimination of non-beneficial tax exemptions that do not support the industrialisation agenda, alongside increased revenues from the oil and gas sector as the country moves into production. The Ministry also projects government expenditure and net lending for the 2026/27 financial year are projected at Shs54.01 trillion, slightly lower than the Shs56.54 trillion approved in this financial year. Net external financing is projected to reduce to Shs4.04 trillion in the next financial year, from Shs5.68 trillion, with total loans projected at Shs8.88 trillion, of which Shs2.95 trillion will be secured on concessional terms.
Domestic borrowing is projected to decline to Shs8.95 trillion from Shs11.38 trillion, which seeks to safeguard fiscal discipline and debt sustainability in the medium term.
Ministry of Finance Permanent Secretary Ramathan Ggoobi said external debt repayments (amortisation) are projected at Shs4.83 trillion, compared with Shs4.99 trillion.
‘Over the medium term, external debt payments are expected to increase due to existing debt repayment profile,’ he said, adding: ‘Going forward, government’s financing strategy is to reduce borrowing on commercial terms and rely more on concessional financing.’
Interest payments in the 2026/27 financial year are projected to total Shs12.74 trillion, equivalent to 4.4 percent of gross domestic product. Of this, Shs10.72 trillion will be domestic interest payments, while Shs2.02 trillion will cover foreign interest payments and commitment fees. Mr Ggoobi noted that, over the medium term, interest payments are expected to average about 4.2 percent of gross domestic product.