Uganda’s national budget for the Financial Year 2026/27 is being prepared under tightening fiscal conditions. The preliminary resource envelope is projected to decline to Shs69.399 trillion, down from Shs72.376 trillion in FY2025/26.
The outlook is contained in the Budget Committee report on the National Budget Framework Paper (NBFP) for FY2026/27–2030/31, which Parliament approved last Thursday, with Deputy Speaker Thomas Tayebwa presiding.
The report was presented to the House by Remigio Achia (Pian County), the Vice Chairperson of Parliament’s Budget Committee. The reduction represents an overall contraction of about Shs2.98 trillion in total resources available to government.
The NBFP attributes the decline in the resource envelope largely to a deliberate scaling back of borrowing. External borrowing for budget support is projected to reduce by Shs1.75 trillion, while external borrowing for project support is expected to fall by Shs1.31 trillion in FY2026/27.
In addition, domestic borrowing is projected to decline by Shs2.43 trillion. Together, these adjustments account for the bulk of the contraction in available resources and reflect government’s efforts to contain debt accumulation and associated debt-servicing costs.
Despite the reduction in borrowing, the NBFP projects growth in domestic revenues, which is expected to partially cushion the overall decline in the resource envelope. Domestic revenues for FY2026/27 are projected at Shs40.09 trillion, up from Shs37.23 trillion in FY2025/26.
The projected increase is mainly attributed to a highly optimistic economic growth projection of 10.4%, alongside improved administrative tax revenue collection measures.
Over the medium term, domestic revenues are projected to rise significantly, driven by continued economic growth in line with the Tenfold Growth Strategy.
The NBFP indicates that this growth will be supported by the introduction of new tax policy measures, enhanced tax administration, higher tax compliance, and improved accountability in the granting of tax holidays.
The framework also highlights plans to eliminate non-beneficial tax exemptions that do not support the industrialisation agenda, alongside expectations of increased revenues from the oil and gas sector, as Uganda is projected to commence production by 31 July 2026.
However, the NBFP makes clear that growth in domestic revenue will not translate into broad fiscal flexibility in the short term. Of the projected Shs69.399 trillion total resource envelope for FY2026/27, only Shs22.47 trillion, representing 32.4 percent, will be available for discretionary expenditure.
The remaining Shs46.92 trillion is committed to non-discretionary or mandatory expenditures, including wages, pensions, debt repayments, interest payments and other statutory obligations.
This significantly limits government’s ability to reallocate resources toward new priorities or scale up underfunded programmes.
Within these constraints, the preliminary expenditure framework for FY2026/27 prioritises funding across programmes aligned with the National Development Plan and the government’s medium-term growth objectives.
The Development Plan Implementation Programme receives the largest share of the budget at 43.4%, largely driven by debt-related obligations. This is followed by the Integrated Transport Infrastructure and Services Programme at 19.7%, the Human Capital Development Programme at 14.2%, and the Governance and Security Programme at 13 percent.
While these programmes absorb the majority of available resources, the NBFP shows that several programmes considered strategic to long-term economic transformation are projected to receive relatively small allocations.
The Tourism Development Programme is projected to receive 0.58% of the budget, while the Digital Transformation Programme is allocated 0.39%. The Manufacturing Programme is projected to receive 0.36%.
Combined, these three programmes account for just 1.33% of the total budget for FY2026/27, despite their strategic role in supporting value addition, innovation and export growth.
The constrained resource envelope is also reflected in projected budget cuts across a number of key programmes compared to FY2025/26.
The Human Capital Development Programme is expected to experience a reduction of Shs1.63 trillion, while the Governance and Security Programme faces a cut of Shs880.17 billion.
The Sustainable Urbanisation and Housing Programme is projected to receive Shs836.94 billion less than in the previous financial year.
Other programmes projected to see reduced allocations include Agro-Industrialisation (Shs362.83 billion), Private Sector Development (Shs173.88 billion), Digital Transformation (Shs108.47 billion), Manufacturing (Shs58.85 billion) and Tourism Development (Shs24.6 billion).
Even within the tight fiscal environment, the NBFP identifies several programmes projected to receive increased funding in FY2026/27. The Sustainable Extractives Industry Development Programme emerges as one of the biggest beneficiaries, with a projected budget increment of Shs821.3 billion, reflecting growing emphasis on the extractives sector ahead of oil production.
The Development Plan Implementation Programme is projected to receive an additional Shs586.27 billion, while the Integrated Transport Infrastructure and Services Programme is allocated a further Shs373.43 billion.
Additional budget increases are projected for the Regional Balanced Development Programme, which is set to receive Shs209.15 billion, and the Sustainable Energy Development Programme, which is projected to receive an increment of Shs137.22 billion.
