Uganda Plans to Reduce Spending and Domestic Borrowing in 2025/26, According to Finance Ministry – Reuters

KAMPALA (Reuters) – The Ugandan government has announced plans to reduce spending by over 20% and domestic borrowing by more than 50% for the fiscal year 2025/26 (July-June), according to a statement from the finance ministry on Friday.

Concerns about Uganda’s escalating public debt have been raised by opposition politicians and have led to credit rating agencies, including Fitch and Moody’s, downgrading the country’s rating.

The government argues that borrowing has been instrumental in stimulating economic growth, which has outpaced many other African nations since the onset of the COVID-19 pandemic.

The projected total government expenditure for the fiscal year 2025/26 is 57.4 trillion Ugandan shillings (approximately $15.56 billion), down from the 72.1 trillion shillings budgeted for the current financial year, as indicated in a draft budget document from the finance ministry.

The government aims to borrow around 4.01 trillion shillings (about $1.09 billion) from the local market through Treasury bonds in the upcoming fiscal year, which represents a 53.9% decrease compared to the 2024/25 fiscal year.

No specific reasons were provided for the reductions in spending or borrowing.

Ramathan Ggoobi, the permanent secretary of the Finance Ministry, stated that the government’s funding priorities include agro-industrialization, tourism, and minerals, such as petroleum.

Ggoobi also mentioned that external debt repayments are expected to increase to 4.03 trillion shillings in 2025/26, up from 3.1 trillion shillings in the current fiscal year, which will further constrain domestic spending.

($1 = 3,689.0000 Ugandan shillings)