As governments across the world prepare their fiscal strategies for 2026 amid tightening global financial conditions, the International Monetary Fund (IMF) has warned that rebuilding fiscal capacity and safeguarding public debt sustainability must remain top priorities, particularly for emerging and developing economies such as Uganda.
In its latest World Economic Outlook, the IMF said rising spending pressures, higher borrowing costs, and fragile global growth leave little room for fiscal slippage, stressing that countries must commit to credible medium-term fiscal consolidation while protecting growth-enhancing expenditure.
‘Replenishing fiscal buffers should be grounded in realistic assumptions about long-term spending pressures and supported by sound debt management practices,’ the IMF said, adding that governments must carefully balance fiscal adjustment with growth-friendly policies.
The IMF cautioned against broad-based subsidies and poorly targeted industrial policies, warning that such measures can strain public finances and distort resource allocation.
Any discretionary fiscal support, it said, should be strictly targeted at households and firms most affected by economic shocks and include clear sunset clauses to ensure temporality.
Where fiscal space is limited, the IMF advised governments to offset new spending through non-priority expenditure cuts or additional revenue measures.
It also encouraged countries to strengthen revenue mobilization, rationalize spending, and improve efficiency by crowding in private investment. In Uganda, the IMF’s message comes as government projects a strong economic outlook.
Speaking during the release of the Quarter Three expenditure recently, Permanent Secretary and Secretary to the Treasury Ramathan Ggoobi, said the economy remains stable, competitive, and resilient.
‘The outlook is positive, with economic growth expected to accelerate to between 6.5 and 7 percent by 2026 and reach double digits once oil production begins,’ he said, noting that all major sectors, agriculture, industry, and services, are expected to perform strongly.
This, he said, continues to be supported by prudent macroeconomic management, rising foreign direct investment, and improving export performance, which have kept inflation and the exchange rate stable.
The Ministry of Finance indicates that the fiscal strategy for the 2026/27 financial year and the medium term is anchored in the Fourth National Development Plan and the Tenfold Growth Strategy.
Key objectives include reducing poverty from 16.1 percent to 14 percent by 2029/30; achieving double-digit economic growth to double GDP within the same period; maintaining core inflation within the 5 percent target; expanding mineral resource management to diversify the economy; accelerating financial inclusion; and creating an average of nearly 885,000 jobs annually.