Musasizi unveils Shs84.4 trillion Budget as Uganda eyes $500b economy

KAMPALA — Finance Minister Henry Musasizi on Thursday unveiled an Shs84.4 trillion budget that places Uganda’s long-awaited oil production and stricter government spending controls at the centre of a strategy to grow the economy nearly tenfold to $500 billion by 2040.

Delivering his first budget speech as Minister of Finance, Planning and Economic Development, Mr Musasizi outlined an ambitious economic roadmap that hinges on commercial oil production, value addition in minerals, and increased investment in wealth-creating sectors under the government’s Agro-industrialisation, Tourism, Minerals, and Science, Technology and Innovation (ATMS) strategy.

The minister told Parliament at Kololo Ceremonial Grounds that the economy had expanded by 6.4 percent during the current financial year, growing to an estimated $69.3 billion (Shs250.4 trillion), up from about $53 billion in 2025.

He said the new budget is designed to accelerate Uganda’s journey towards becoming a $500 billion economy by 2040 while positioning the country for graduation from the category of Least Developed Countries (LDCs).

“The transformation will come from the productive sectors of the economy,” Mr Musasizi said.

First oil finally in sight

A key highlight of the budget is the expectation that Uganda will begin commercial oil production during the first quarter of the new financial year, ending a 17-year wait since commercially viable oil reserves were confirmed in the Albertine region.

The government projects that oil production will contribute about Shs1.44 trillion to domestic revenues in the 2026/27 financial year.

The minister reported that major infrastructure projects supporting oil production, including the East African Crude Oil Pipeline (EACOP) and central processing facilities, are nearing completion.

“The construction of the East African Crude Oil Pipeline and the central processing facilities is at an advanced stage and nearing completion,” he said.

The commencement of oil production is expected to provide government with an additional source of revenue at a time when it is seeking to reduce borrowing and strengthen domestic resource mobilisation.

Mining sector gets fresh attention

Beyond oil, government is banking on Uganda’s mineral wealth as another pillar of economic transformation.

Mr Musasizi said exploration and evaluation of uranium, lithium and manganese deposits are ongoing in different parts of the country as authorities seek to increase value addition and export earnings.

He highlighted the recent commissioning of a clinker factory in Moroto District, describing it as a major step towards adding value to Uganda’s limestone resources and supporting local cement manufacturing.

The government has allocated Shs473.5 billion to the minerals, oil and gas sector, with priorities including mineral exploration, capitalisation of the Uganda National Mining Company, establishment of mineral markets and buying centres, operationalisation of EACOP and development of the planned oil refinery.

Crackdown on waste

In a departure from previous budget speeches that focused heavily on spending allocations, Mr Musasizi repeatedly stressed the need for accountability and discipline in public expenditure.

He announced a series of reforms aimed at eliminating waste, corruption and inefficiency within government institutions.

“Implementing this year’s budget requires discipline. It requires accountability. It requires efficiency. And it requires integrity,” he said.

Among the measures announced is the introduction of a budget discipline and accountability charter that all accounting officers will be required to sign as part of their performance contracts.

The charter will provide sanctions for breaches of accountability rules in planning, budgeting and utilisation of public resources.

The minister also promised procurement reforms, digitisation of government systems, stronger internal controls and audits, and increased transparency in public institutions.

In one of the most notable austerity measures, government announced that state-funded celebrations during public holidays will be suspended.

“As guided by His Excellency the President, state-funded celebrations on public holidays will be suspended except functions on religious holidays. Going forward, public holidays will be observed without official ceremonies,” Mr Musasizi said.

Revenue target rises

Government expects domestic revenue collections to increase sharply from Shs35.7 trillion this financial year to Shs45.6 trillion in 2026/27.

The projected increase will be driven by stronger economic activity, improved tax administration by the Uganda Revenue Authority and expected revenues from oil production.

Of the projected domestic revenues, Shs40.1 trillion will come from taxes, while Shs4 trillion will be generated through non-tax revenues. Oil revenues are expected to contribute Shs1.4 trillion.

The budget will also be financed through domestic and external borrowing.

Government plans to borrow about Shs12 trillion from the domestic market through Treasury bills and bonds, while external financing is projected at Shs12.5 trillion.

Mr Musasizi said external debt repayments are expected to decline from Shs5 trillion this year to Shs4.2 trillion next financial year as government reduces reliance on commercial borrowing.

As of December 2025, Uganda’s public debt stood at $34.86 billion (about Shs126 trillion), representing approximately 53 percent of Gross Domestic Product.

Wealth creation remains priority

The ATMS sectors continue to dominate government spending priorities.

Agro-industrialisation received the largest allocation among the productive sectors at Shs2.26 trillion, the highest allocation ever to the programme.

Funding will support agricultural research, commercialisation of the anti-tick vaccine, irrigation infrastructure, extension services, quality agricultural inputs, agro-processing and market access.

The Science, Technology and Innovation sector has been allocated Shs1.14 trillion to support commercialisation of local innovations including Kiira Motors vehicles, Dei BioPharma pharmaceuticals, coffee products and banana-based industrial products.

Government also plans to establish a Hi-Tech City and expand digital infrastructure to support e-commerce and business process outsourcing.

Tourism has been allocated Shs567 billion to finance destination marketing, tourism infrastructure development, wildlife conservation and health tourism.

Meanwhile, Mr Musasizi reported that government has invested Shs11 trillion in wealth creation programmes, with the Parish Development Model expected to have reached more than four million beneficiaries by the end of June.

Looking beyond LDC status

The minister said Uganda is now preparing for what he described as the imminent confirmation of its graduation from the Least Developed Countries category in March 2027.

He argued that the transition would strengthen investor confidence, lower sovereign risk and improve access to international investment capital.

For government, the coming financial year is therefore being presented as a turning point — one in which first oil revenues, mineral development and tighter control of public spending combine to accelerate Uganda’s economic transformation agenda.

Whether those ambitions translate into tangible improvements in jobs, incomes and public services will be the key test of Mr Musasizi’s maiden budget.