Overview:
According to Ministry of Finance, gov't operations during April 2026 resulted in a fiscal deficit of UGX 264.5 billion, lower than the projected UGX 452.13.
The government of Uganda reduced its borrowing requirements in April 2026, posting a smaller-than-expected fiscal deficit despite weaker tax collections and mounting pressure from global fuel supply disruptions linked to tensions in the Middle East.
According to the Ministry of Finance’s latest performance update, government operations during April recorded a fiscal deficit of Shs264.5 billion, significantly lower than the projected Shs452.1 billion for the month.
The improved fiscal position was largely attributed to lower spending on infrastructure and other non-financial assets, as delays in externally financed projects slowed the release and absorption of funds.
The figures come at a time when Uganda is grappling with the ripple effects of geopolitical instability in the Middle East, which has disrupted petroleum supply chains and affected fuel imports into the country.
Although government expenditure exceeded initial plans during the month, reduced capital investment spending helped contain the borrowing gap.
Total government spending in April amounted to Shs2.82 trillion, exceeding the programmed expenditure of Shs2.59 trillion by about Shs229 billion.
The Ministry of Finance attributed the overspending mainly to higher grants from central government to local governments, tertiary institutions and state agencies, including Uganda Airlines.
Uganda Airlines was among beneficiaries of a supplementary budget approved by Parliament in March under the Ministry of Works and Transport. The supplementary allocation, estimated at nearly Shs1.7 trillion, included financing for the acquisition of new aircraft, although officials have not publicly disclosed the exact amount earmarked for the national carrier.
Government also spent more than anticipated on employee compensation and procurement of goods and services during the month.
At the same time, expenditure on infrastructure projects remained subdued. Only Shs165.2 billion was spent on acquisition of non-financial assets such as roads, bridges and land acquisition for right of way projects, far below the planned Shs966.2 billion.
The Ministry said the underperformance was mainly caused by slow disbursement of external financing for ongoing projects.
Meanwhile, domestic revenue collections fell below target, reflecting weaker economic activity and disruptions in international trade flows.
Total government revenues and grants amounted to Shs2.72 trillion during the month, representing a shortfall of about Shs384 billion against target.
Domestic revenue collections stood at Shs2.66 trillion, achieving 90.8 percent of the planned target of Shs2.93 trillion. Non-tax revenues contributed Shs191.4 billion.
According to the Uganda Revenue Authority, tax revenues missed target by Shs160.2 billion, with all three major tax categories registering deficits.
Direct domestic taxes underperformed by Shs11.4 billion, mainly due to lower collections from interest earned on treasury bills, although Pay-As-You-Earn (PAYE) and corporate tax collections remained relatively strong.
Indirect taxes also fell short by Shs73.2 billion as collections from excise duty and Value Added Tax (VAT) came in below expectations.
International trade taxes generated nearly Shs989 billion, slightly below the targeted Shs1 trillion. The shortfall was largely linked to lower petroleum duty collections after fuel imports were disrupted by instability in the Middle East.
The ongoing conflict involving Iran, Israel and the United States has disrupted movement through the Strait of Hormuz, a critical global oil transit route, delaying fuel shipments destined for East Africa.
Hundreds of fuel tankers have reportedly faced delays or diversions as traders and shipping firms navigate heightened security risks in the Gulf region.
However, Permanent Secretary and Secretary to the Treasury Ramathan Ggoobi said government expects fuel supplies to stabilize because Uganda’s fuel supplier, Vitol, operates refineries in multiple parts of the world.
Despite the external pressures, the Ugandan shilling strengthened slightly against the US dollar during April.
The local currency appreciated by 0.4 percent, trading at an average mid-rate of Shs3,716.7 per dollar compared to Shs3,730.5 in March, marking a recovery after two consecutive months of depreciation.
Analysts attribute the rebound to stronger foreign exchange inflows from exports and portfolio investors, which outweighed demand for dollars from manufacturers and energy importers.
However, the shilling continued to weaken against major global currencies such as the Euro and the British pound sterling.
The Ministry of Finance said the trend reflected renewed investor confidence in European debt markets, which attracted capital inflows amid continuing global uncertainty.