Overview:
The IMF warns Uganda to prioritize debt sustainability and fiscal discipline as the government projects double-digit growth driven by upcoming oil production.
WASHINGTON — The International Monetary Fund has warned that emerging economies like Uganda must prioritize public debt sustainability and fiscal discipline, even as Ugandan officials project double-digit growth once oil production begins.
In its latest World Economic Outlook, the IMF said tightening global financial conditions and rising borrowing costs leave little room for fiscal slippage. The report urged governments to rebuild fiscal buffers and commit to credible consolidation plans while protecting essential growth-enhancing spending.
“Replenishing fiscal buffers should be grounded in realistic assumptions about long-term spending pressures and supported by sound debt management practices,” the IMF stated.
The fund cautioned against broad-based subsidies and poorly targeted industrial policies, advising that any discretionary support should be strictly limited to the most vulnerable households and firms. Where fiscal space is tight, the IMF recommended offsetting new spending with cuts to non-priority areas or additional revenue measures.
The warning comes as the Ugandan government maintains an optimistic outlook for the domestic economy. Ramathan Ggoobi, the permanent secretary and secretary to the Treasury, said the economy remains stable 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,” Ggoobi said during the recent release of third-quarter expenditure figures.
He attributed the projected growth to prudent macroeconomic management and rising foreign direct investment, particularly in the agriculture, industry and services sectors.
The Ministry of Finance indicated that its fiscal strategy for the 2026-27 financial year is anchored in the Fourth National Development Plan. The government’s “Tenfold Growth Strategy” aims to double the nation’s gross domestic product and reduce poverty from 16.1 percent to 14 percent by 2030.
Other key objectives include maintaining core inflation within a 5 percent target, expanding mineral resource management and creating an average of nearly 885,000 jobs annually to accelerate financial inclusion.