Overview:
To kickstart the plan, the government has earmarked Shs.1.4 trillion to clear verified outstanding arrears.
In a renewed push for fiscal discipline and improved public financial management, Uganda’s Ministry of Finance, Planning and Economic Development (MoFPED) has launched an ambitious strategy to eliminate domestic arrears within the next three financial years, starting FY 2025/26.
The strategy comes in response to growing concerns about the persistent build-up of unpaid bills by government institutions — known as domestic arrears — which have strained supplier relationships, disrupted service delivery, and undermined private sector confidence. As of the most recent assessments, arrears have ballooned to worrying levels, prompting urgent intervention from the Ministry.
To kickstart the plan, the government has earmarked Shs.1.4 trillion to clear verified outstanding arrears. This allocation, already included in the FY 2025/26 budget, will be disbursed in the second quarter (October to December 2025) following a rigorous verification process conducted by an independent audit firm. This verification step aims to ensure transparency and weed out illegitimate or duplicated claims before funds are released.
In a strong signal of the government’s resolve to curb the problem at its root, the Ministry has introduced strict accountability measures. Effective immediately, Accounting Officers who are found to have created new arrears in violation of financial regulations will face sanctions. These may include disciplinary action and, more significantly, non-renewal of their performance contracts.
Dr. Ramathan Ggoobi, the Permanent Secretary and Secretary to the Treasury (PSST), emphasized the government’s zero-tolerance stance on the matter. “We cannot continue with business as usual,” Dr. Ggoobi said in a statement shared via the Ministry’s official X (formerly Twitter) account. “Clearing existing arrears is just one part of the equation. Preventing new ones from being created is equally critical.”
The Ministry has attributed the accumulation of arrears to a combination of weak commitment controls, poor planning, and failure by Accounting Officers to adhere to approved budgets. Moving forward, the government intends to tighten expenditure controls, enforce stricter budget discipline, and strengthen oversight mechanisms across ministries, departments, and agencies (MDAs).
The new strategy is expected to bring relief to the private sector, particularly local contractors and suppliers who have long complained of delayed payments for goods and services delivered to government entities. Clearing the arrears is also seen as a way to stimulate economic activity by injecting much-needed liquidity back into the economy.
If successfully implemented, the three-year plan will mark a major milestone in Uganda’s efforts to enhance fiscal credibility, restore trust in public institutions, and create a more predictable environment for private sector growth.