Legal claims against government have increased sharply over the last three years, reaching Shs6.45 trillion by June 2025, according to the Ministry of Finance Contingent Liabilities Annual Report for the 2024/25 financial year.
The report shows that the value of court cases and other legal disputes involving government institutions rose from Shs4.41 trillion in June 2023 to Shs4.91 trillion in June 2024, representing an 11.2 percent increase.
The figure then jumped to Shs6.45 trillion in June 2025, marking a further 31.4 percent increase within a year.
Overall, legal claims against government have grown by about 46.2 percent over the last three years, highlighting what officials describe as one of the fastest-growing fiscal risks facing government.
In notes published together with the report, Finance permanent secretary and secretary to the treasury Ramathan Ggoobi said legal proceedings had become one of the fastest-growing contingent liabilities facing government, noting that proactive legal risk management was necessary to protect fiscal sustainability.
The latest increase of about Shs1.54 trillion means government faces growing exposure to potential payments arising from court awards, compensation claims, arbitration cases and contractual disputes.
Biggest share
The report shows that ministries account for the largest share of legal claims against government, with claims involving ministries increasing from Shs4.47 trillion in 2024 to Shs6.25 trillion in 2025, representing a 39.7 percent increase.
This rise accounts for most of the overall growth in legal claims recorded during the year and means ministries are responsible for nearly all of government’s legal liability exposure.
According to the report, many of the disputes are linked to land compensation claims, contracts, infrastructure projects and other government obligations that have ended up in court.
The report notes that because ministries implement major government programmes and infrastructure projects, they are naturally exposed to more disputes involving contractors, landowners and service providers.
However, the report says the rapid increase points to weaknesses in contract management and the need for stronger dispute prevention measures.
Agencies register decline
While ministries recorded a sharp increase in legal liabilities, government agencies registered a significant reduction.
The report shows that legal claims against agencies fell from Shs424b in June 2024 to Shs184.2b in June 2025, representing a 56.5 percent decline.
This improvement, the report notes, could be the result of successful court outcomes, settlements of disputes, and better management of legal risks.
The decline demonstrates that effective handling of disputes can help government avoid costly court awards and compensation payments.
Local governments and universities also affected
Although much smaller compared to ministries, legal claims involving local governments also increased during the period under review.
The report shows that claims against local governments rose from Shs9.97b in June 2024 to Shs13.36b in June 2025, representing a 34 percent increase.
Public universities and other tertiary institutions also registered an increase in claims, rising from Shs2.34b to Shs2.64b, an increase of about 13 percent.
The report notes that disputes involving local governments are mainly linked to land matters, employment-related cases and contractual disagreements.
Diplomatic claims
Embassies and missions reported minimal exposure, while referral hospitals reported no legal proceedings during the period under review.
A hidden risk to public finances
The report describes legal claims as contingent liabilities, which means that, whereas they are not yet part of the official public debt, they remain potential obligations that could become actual expenditures if courts rule against government or settlements are reached.
As a result, the current Shs6.45 trillion represents a significant financial risk that could affect future government budgets.
The report warns that if some of these claims are converted into court awards, government could be required to make substantial payments, placing additional pressure on public finances.
Threat to development spending
The growing stock of legal claims could have serious implications for government spending.
According to the report, large court awards and settlements could disrupt budget planning and force government to redirect resources away from priority sectors such as health, education, roads, and other development programmes.
The report warns that unmanaged legal liabilities could crowd out priority expenditures and increase pressure on supplementary budgets.
Why the claims are growing
The report identifies several factors behind the increase in legal claims, including disputes over land acquisition and compensation, disagreements involving government contracts, delays in resolving disputes, and challenges associated with major infrastructure projects.
The report notes that some disputes remain unresolved for years, allowing compensation amounts, legal costs, and interest charges to accumulate.
As a result, the final cost to government can become much higher than the original value of the claim.
Government must act
To reduce future liabilities, the report recommends strengthening contract management systems across government institutions and promoting early dispute resolution mechanisms.
The report also calls for closer coordination between accounting officers, the Attorney General’s Chambers, and the Ministry of Finance to identify legal risks before they escalate into costly liabilities.
The Ministry of Finance believes, the report notes, that better legal risk management will help government avoid unnecessary court cases and reduce the amount spent on compensation and settlements.
Growing concern
The figures reveal a clear upward trend in legal claims against government. In just three years, the value of these claims has increased from Shs4.41 trillion to Shs6.45 trillion, an overall rise of 46.2 percent.
While government guarantees and other contingent liabilities remain largely manageable, the report suggests that legal claims are becoming an increasingly serious challenge to public finances, with Ggoobi stressing that proactive legal risk management, stronger contract administration, and early settlement of disputes would be essential to prevent legal claims from placing additional pressure on government resources.