Uganda commits UGX 1.4 trillion to clear domestic arrears

KAMPALA: The Permanent Secretary to the Treasury, Dr. Ramathan Ggoobi, has reassured Parliament that the government is progressively clearing verified domestic arrears while maintaining strong economic performance.

Dr. Ggoobi, accompanied by the Acting Accountant General, Godfrey Ssemugooma, and other senior officials from the Ministry of Finance, appeared before the Parliamentary Public Accounts Committee (PAC) on Wednesday to respond to the Auditor General’s Report on the Consolidated Financial Statement of the Government of Uganda for the financial year 2024/25.

During the session, Dr. Ggoobi said the government had cleared UGX 265 billion worth of domestic arrears in FY 2024/25 and emphasized that the Ministry has allocated UGX 1.4 trillion in the current FY 2025/26 budget to further reduce the verified stock of arrears.

“The Ministry has continued to implement the Domestic Arrears Strategy and is progressively clearing the verified stock of domestic arrears,” Dr. Ggoobi said, adding that the initiative is aimed at improving public financial management and reducing fiscal risks.

He also highlighted the broader economic context, noting that Uganda’s economy is performing well, with GDP projected to grow between 6.5% and 7% in FY 2025/26. Dr. Ggoobi said prices of goods and services have remained stable, and the Uganda shilling has strengthened against major currencies, supported by good export performance.

On public debt management, the PSST said the government is intentionally rebalancing its debt portfolio to rely more on concessional external financing, with concessional loans remaining the “first call” for contracting new debt. He also confirmed that Uganda is successfully accessing concessional financing from the World Bank.

Dr. Ggoobi further assured lawmakers that the Ministry is prioritizing long-term investments to stimulate growth. He revealed that the government plans to provide Shs 500 billion in capitalization funding to Uganda Development Corporation (UDC) in FY 2026/27 to complete pending projects and improve profitability.

PAC members welcomed the Ministry’s clarifications but urged continuous monitoring to ensure that the clearance of arrears does not create new fiscal pressures.

The Ministry of Finance has been under pressure to address the accumulation of domestic arrears, which includes outstanding payments to contractors, suppliers, and service providers. Analysts say timely clearance will improve liquidity in the private sector and support investment.

Dr. Ggoobi emphasized that the combined approach of clearing arrears, managing debt, and supporting strategic investments is aimed at strengthening public finance management while fostering sustainable economic growth.