Uganda Government unveils plan to tame debt, fiscal deficit

KAMPALA — Government has unveiled a five-year fiscal plan aimed at containing public debt, reducing borrowing costs and creating room for strategic investment and private-sector growth.

Finance Minister Henry Musasizi on Wednesday presented the Charter for Fiscal Responsibility (CFR) for 2026/27–2030/31 to the Parliamentary Committee on Budget, chaired by Mr Amos Kankunda.

The third Charter, which follows the expiry of the previous one at the end of the 2025/26 financial year, will guide government budget and fiscal policy decisions over the next five years.

The Charter projects public debt to peak at 55.1 per cent of non-oil GDP in 2027/28, before declining gradually to 50 per cent by 2030/31.

The debt rule will remain the government’s main fiscal anchor as it seeks to maintain macroeconomic stability and keep public borrowing sustainable.

Government also plans to reduce commercial borrowing relative to domestic non-oil revenue from 33.7 per cent in 2026/27 to 19.3 per cent by 2030/31.

Over the same period, interest payments are projected to fall from 32.5 per cent to 20 per cent of domestic non-oil revenue.

The Charter further targets a reduction in the fiscal deficit, excluding oil revenue, from 6.6 per cent of non-oil GDP in 2026/27 to 1.5 per cent by 2030/31.

Mr Musasizi said the fiscal strategy is intended to preserve macroeconomic stability, ensure debt sustainability and create fiscal space for strategic public investments and private-sector-led growth.

The targets are aligned with the NRM Manifesto, the Fourth National Development Plan, the Ten-Fold Growth Strategy and the East African Monetary Union convergence criteria.

Project performance

Minister of State for Planning Amos Lugoloobi said meeting the fiscal targets would depend largely on how well government projects perform.

He said macroeconomic outcomes are closely linked to the performance of public investments, prompting the Ministry of Finance to review projects in the Integrated Bank of Projects individually.

Mr Lugoloobi said the reviews are intended to establish the progress of projects and whether they are delivering the expected economic returns.

“The performance of projects has been placed at the forefront during this fiscal period,” he said.

Oil revenue

The Charter also sets out rules for managing petroleum revenues as Uganda prepares for increased oil revenues.

Under the framework, a maximum of 0.8 per cent of the previous year’s non-oil GDP outturn in oil revenue will be transferred to the Consolidated Fund to support budget operations.

The remainder will be transferred to the Petroleum Revenue Investment Reserve, which is managed by the Bank of Uganda.

The new Charter was developed following consultations with institutions including the Bank of Uganda, Auditor General’s Office, Uganda Bureau of Statistics, Parliamentary Budget Office, Petroleum Authority of Uganda, National Planning Authority, Uganda Revenue Authority and civil society organisations.

Government says the overarching objective is to support socioeconomic transformation while maintaining macroeconomic stability, controlling debt and ensuring prudent management of the country’s petroleum resources.