Revenue shortfall pushes Uganda budget deficit to Shs244b

Government recorded a fiscal deficit of Shs244.14 billion in September, far exceeding the planned Shs33.18 billion, as shortfalls in domestic revenue collections weighed on the public finances.

The September 2026 Performance of the Economy Report, citing preliminary figures from the Ministry of Finance, Planning and Economic Development, shows that the deficit was more than seven times the programmed level.

The shortfall was largely driven by weaker-than-expected revenue collections, with both tax and non-tax revenues falling below their respective targets.

Government collected Shs2.87 trillion in domestic revenue against a target of Shs3.15 trillion, representing 91.3 per cent performance and a shortfall of Shs273.67 billion.

Tax collections amounted to Shs2.67 trillion against the planned Shs2.88 trillion, leaving a deficit of Shs218.77 billion. Non-tax revenue performed worse against its target, with collections of Shs206.09 billion against Shs260.99 billion, representing 79 per cent performance.

Grants also fell slightly short of expectations, bringing in Shs32.91 billion against the programmed Shs34.81 billion.

Overall, government revenue, including grants, stood at Shs2.90 trillion compared with the planned Shs3.18 trillion, leaving a shortfall of Shs275.57 billion.

The figures highlight the pressure that revenue underperformance can place on government’s ability to finance planned expenditure without increasing borrowing or adjusting spending priorities.

On the expenditure side, government spending was slightly above the monthly target. Total expenses reached Shs2.70 trillion against the planned Shs2.68 trillion, an overshoot of Shs23.83 billion.

Spending on grants exceeded the target by Shs28.92 billion, reaching Shs860.6 billion against the planned Shs831.67 billion. Social benefits also recorded a significant overshoot, with expenditure of Shs57.72 billion against a target of Shs30.21 billion, or 191 per cent performance.

Purchases of goods and services amounted to Shs467.83 billion, exceeding the planned Shs459.38 billion by Shs8.45 billion.

However, compensation of employees remained slightly below target, at Shs445.41 billion against Shs448.48 billion.

Interest payments were on target at Shs715.46 billion, including Shs628.63 billion in domestic interest and Shs86.84 billion in foreign interest.

The report shows that the gross operating balance, which reflects the difference between revenue and recurrent expenditure, stood at Shs202.62 billion, against a programmed Shs502.02 billion. This represented a shortfall of Shs299.4 billion.

Government also spent less than planned on the acquisition of non-financial assets, including development projects. The expenditure amounted to Shs446.76 billion against a target of Shs535.2 billion, representing 83.5 per cent performance.

The underspending was largely concentrated in externally financed development projects, where expenditure reached Shs196.49 billion against the planned Shs280.19 billion, a shortfall of Shs83.7 billion.

Domestic development spending was closer to target, reaching Shs250.27 billion against the planned Shs255.01 billion.

Despite the lower-than-planned development expenditure, the savings were insufficient to offset the revenue shortfall and higher spending in some categories.

The September figures underscore the importance of domestic revenue mobilisation in financing government programmes and limiting the need for additional borrowing.

While the report attributes the higher deficit mainly to revenue shortfalls, the monthly figures alone do not establish whether the underperformance arose from weaker economic activity, changes in tax compliance, delayed payments or other collection-related factors.

The extent to which the September shortfall affects the broader fiscal position will depend on revenue performance and expenditure trends in the remaining months of the financial year.