Uganda eyes Shs2.2 trillion from first oil as economy grows

KAMPALA: The government of Uganda expects to earn about Shs2.2 trillion from its first oil in the 2026/27 financial year, signalling a major shift in the country’s revenue base as preparations for oil production advance.

Presenting the Ministry of Finance, Planning and Economic Development (MoFPED) Ministerial Policy Statement before Parliament’s Finance Committee on March 24, 2026, State Minister for General Duties, Mr Henry Musasizi, said the oil sector is nearing readiness, with key infrastructure progressing steadily.

Mr Musasizi said development of the East African Crude Oil Pipeline (EACOP) is now at 80 per cent, while engineering studies for the oil refinery are ongoing.

“The Government expects about Shs2.2 trillion from oil revenues next financial year, of which Shs1.4 trillion is programmed to finance the budget,” he said.

The anticipated oil income is expected to boost domestic resource mobilisation and reduce reliance on borrowing, as Uganda prepares to join oil-producing nations.

Mr Musasizi appeared before the committee alongside the Under Secretary and Accounting Officer, Dr Sengonzi Damulira, and a technical team from the ministry.

Beyond oil, the minister said the economy continues to show strong performance, underpinned by growth across key sectors.

Uganda’s economy expanded by 8.5 per cent in the second quarter of the 2025/26 financial year, up from 5.4 per cent recorded in the same period of the previous year.

“This performance reflects effective economic management, supported by strong aggregate demand and sustained investments in productive sectors, particularly ICT, construction and machinery, which are critical for long-term growth and structural transformation,” Mr Musasizi said.

He added that macroeconomic stability has been maintained, with inflation continuing to decline.

Annual inflation dropped to 2.9 per cent in February 2026 from 3.2 per cent in January, a trend the minister attributed to prudent fiscal and monetary policies, as well as improved food supply.

The country also recorded a merchandise trade surplus of $147.26 million in January 2026, marking a significant turnaround from previous deficits and reflecting stronger export performance.

On domestic revenue mobilisation, Mr Musasizi said government collected Shs16.48 trillion in the second quarter against a target of Shs17.51 trillion, representing a performance rate of 94.09 per cent.

The collections, he noted, reflect an 8.05 per cent growth compared to the same period in the 2024/25 financial year.

Despite falling short of the target, the minister said the growth trajectory remains positive and consistent with the broader economic expansion.

Analysts say the expected inflow from oil revenues could significantly ease fiscal pressures if managed prudently, particularly in financing infrastructure and development priorities.

However, the Finance Committee is expected to scrutinise the ministry’s projections and policy priorities as part of the budget approval process for the next financial year.

Uganda is targeting first oil production in the near term, with ongoing investments in pipeline infrastructure and refinery development seen as critical to unlocking the sector’s full potential.