Uganda posts Shs950b fiscal surplus in December amid revenue shortfalls

KAMPALA – Preliminary data from the Ministry of Finance, Planning and Economic Development (MOFPED) shows that Uganda recorded a fiscal surplus of Shs.951.59 billion in December 2025, significantly below the planned target of Shs.1,720.4 billion for the month. The lower-than-expected surplus was driven by a combination of revenue shortfalls and higher-than-budgeted government spending.

According to the Performance of the Economy Report for December 2025, total revenue and grants collected during the month amounted to Shs.4,085.10 billion, falling short of the Shs.4,480.83 billion target by Shs.395.73 billion. Domestic revenues contributed Shs.3,924.70 billion, while grants from development partners accounted for Shs.160.40 billion. Of the grant total, project support grants stood at Shs.106.8 billion, and budget support grants at Shs.53.6 billion, including allocations to the Intergovernmental Fiscal Transfers Program (UgIFT).

Domestic revenue collections underperformed, achieving 91.3 percent of the target. Tax revenues amounted to Shs.3,788.59 billion, reflecting shortfalls across all major tax heads, while non-tax revenues fell to Shs.136.11 billion, underperforming by Shs.80.67 billion.

“The shortfalls are attributed to several factors, including delays in remittance of Pay As You Earn (PAYE) from local governments during payroll system transitions, reduced donor support for certain projects, a surge in illicit alcohol production, and changes in import composition affecting taxable imports,” the report reads.

Despite the monthly underperformance, cumulative domestic revenue collections for the first half of the 2025/26 financial year (July–December) reached Shs.16,877.73 billion, representing 94.1 percent of the Shs.17,931.29 billion target. This implies a shortfall of Shs.1,053.56 billion. Nevertheless, the collections showed an 8.69 percent growth compared to Shs.15,528.94 billion collected during the same period in the previous financial year, driven largely by improved economic activity.

On the expenditure side, the government spent Shs.2,456.91 billion in December, exceeding the planned Shs.2,314.5 billion by Shs.142.41 billion. Overspending was largely seen in purchases of goods and services, which reached Shs.795.73 billion, a 130.5 percent performance against the budget. Compensation of employees was below target at Shs.493.13 billion, while social benefits were underspent at Shs.54.68 billion. Interest payments remained on target at Shs.388.34 billion, fully covering both domestic and foreign obligations.

Cumulatively, the net acquisition of non-financial assets during the month reached Shs.676.6 billion, exceeding the planned Shs.445.93 billion, highlighting increased investments in public infrastructure.

Finance experts note that while the fiscal surplus demonstrates the government’s ability to manage its finances, the shortfalls in revenue and overspending on some expenditures signal the need for tighter fiscal controls. “The government’s December performance shows resilience, but continued monitoring of revenue mobilization and spending efficiency is critical, especially as revenue collection targets for the full financial year remain under pressure,” said a senior economist at a Kampala-based research institute.

The Ministry of Finance report also underscores the importance of donor support and the need to curb illicit trade, particularly in alcohol, as these factors directly impact domestic revenue performance.

With the government recording higher-than-planned expenditure in key areas while grappling with revenue shortfalls, the December fiscal results underscore the delicate balance required to maintain sustainable public finances as Uganda approaches the second half of the 2025/26 financial year.