Uganda’s GDP is expected to expand to Shs250.0 trillion (equivalent to USD 66.1 billion) in FY 2025/26 from Shs222.7 trillion (equivalent to USD 59.3 billion) in FY 2024/25.
The Ministry of Finance, Planning, and Economic Development unveiled its National Budget Framework Paper (NBFP) for the fiscal year 2025/2026 in December 2024.
This strong growth will result into an increase in income per capita to USD 1.338.7 in FY 2025/2026 from USD 1.236.7 by end of FY 2024/2025.In Purchasing Power Parity (PPP) terms, GDP is projected to expand to USD 188.0 billion in FY 2025/2026 from USD 168.5 billion in FY 2024/2025.
The framework which Parliament approved in January 2025 set the tone for the country’s economic future, outlining key fiscal policies, expenditure priorities, and revenue targets.
The theme of the NBFP for FY 2025/26 is “Full Monetization of Uganda’s Economy through Commercial Agriculture, Industrialization, Expanding and Broadening Social Services, Digital Transformation, and Market Access”.
The NBFP is consistent with the Fourth National Development Plan (NDP IV) for the period FY 2025/26 to FY 2029/30 as well as the Charter for Fiscal Responsibility and satisfies the requirements of gender, equity responsiveness, and balanced development.
The preliminary projected Resource Envelope for FY 2025/26 amounts to Shs57.441 trillion, which has been reduced by Shs14.695 trillion from Shs72.137 trillion of the current FY 2024/25.
Domestic resources are projected to increase by Shs1.7 trillion to Shs33.68 trillion in FY 2025/26 from Shs31.98 trillion in FY 2024/25, on account of strong economic growth and the widening of the tax base.
The economy is projected to grow by 6.4% at the end of FY 2024/25, at least 7% in FY 2025/2,6, and to double digits at the onset of commercial production of oil and gas.
One of the biggest wins from the 2025/2026 budget framework was the government’s renewed focus on infrastructure development. With Uganda’s economy still heavily reliant on agriculture, it was recognized that the future of the country lies in improving roads, railways, electricity, and digital infrastructure.
Anita Annet Among, Speaker of Parliament, in her forward highlighted the critical role of legislation and accountability in Uganda’s development. She noted that the Legislation, Oversight, and Representation (LOR) program is aligned with NDPIV objectives, focusing on strengthening good governance, security, and the role of the state in development.
Among stressed the importance of improved budget scrutiny, resource allocation, and participation in governance.
“I commend all the stakeholders involved in this process and call upon you all to work together to ensure the sustainable development and utilization of resources for the economic transformation of Uganda,” she said while urging unity in implementing the government’s vision.
In his forward, Ramathan Ggoobi, Permanent Secretary and Secretary to the Treasury, also emphasized the importance of tailored planning processes and resource mobilization.
“By strengthening research and evaluation functions, we aim to make planning processes more responsive to Uganda’s unique social, economic, and environmental context,” he said.
Ggoobi stressed the need for efficient budgeting systems that prioritize equity, gender, and climate considerations to ensure long-term economic success. A major focus was the rehabilitation of rural roads, particularly in the northern and eastern regions, which are key agricultural zones.
Improving road networks would help farmers access markets more easily, boosting agricultural productivity and economic growth.
Additionally, the government outlined plans for new investments in solar energy, aimed at expanding access to electricity in off-grid areas.
These infrastructure upgrades are seen as vital for unlocking Uganda’s potential, creating jobs, and improving the quality of life for many Ugandans, particularly in rural regions.
Another significant win was the allocation of additional resources to the health and education sectors. Uganda’s healthcare system had been underfunded for years, leading to shortages of medical supplies and inadequate facilities in rural areas.
For the first time, a substantial 15% of the national budget was dedicated to healthcare, addressing long-standing challenges like inadequate maternal healthcare services and medical personnel shortages.
In education, the government proposed expanding the Universal Secondary Education (USE) program and building new schools in underserved districts.
This was viewed as a crucial step toward improving human capital development, particularly as the country’s young population continues to grow rapidly.
Both sectors are poised to benefit from a much-needed cash infusion, with the hope of fostering a healthier and better-educated population that can drive the economy forward. The 2025/2026 budget also introduced long-awaited tax reforms, aiming at simplifying the tax code.
The government focused on closing loopholes, expanding the tax base, and improving tax compliance. Despite the wins, the budget framework was not without its challenges, which could limit the impact of the government’s ambitious plans.
One of the more concerning aspects was the projected rise in Uganda’s public debt. To finance its infrastructure and social programs, the government planned to borrow heavily from international markets and institutions.
This increase in debt raised alarms among economists, who warned that Uganda’s debt-to-GDP ratio, which had been steadily climbing in recent years, could surpass the 50% threshold by 2026.
Moreover, the budget relied heavily on optimistic revenue projections. The government anticipated a 10% increase in tax revenues, fueled by the expanded tax base and improved compliance.
However, critics pointed out that Uganda’s economy remains largely informal, with many businesses operating outside the formal tax system.
This makes it difficult to reach ambitious revenue targets, and there are concerns that the government might fall short of its projections, limiting the funds available for the planned infrastructure and social programs.
Another concern was the potential inflationary pressure caused by the government’s heavy infrastructure spending. If inflation continues to rise, it could undermine the purchasing power of ordinary citizens, especially in rural areas where the cost of basic goods is already a major challenge.
While the budget outlined several ambitious initiatives for infrastructure and social programs, the country’s extractive industries also featured prominently as a driver of future growth.
Under the Sustainable Extractives Industry Development Programme, Uganda aims to capitalize on its mineral and petroleum resources for long-term prosperity.
Eng. Irene Bateebe, the Permanent Secretary of the Ministry of Energy and Mineral Development, emphasized the transformative potential of the extractives sector.
She noted, “A sustainable extractives industry is a major source of revenue, infrastructure development, and economic diversification.”
The government plans to increase the national storage for refined petroleum products, boost oil and gas revenue from UGX 183.7 billion to UGX 6,475 billion, and increase mineral revenue from UGX 180 billion to UGX 750 billion.
These measures are expected to diversify the economy and generate significant revenue that could be reinvested in key sectors like education, healthcare, and infrastructure. One of the key goals of the program is to create more employment in the extractives industry.
The government aims to increase the number of Ugandans employed in the sector from 1.6 million to 2.0 million, with a focus on gender and regional equity.
Eng. Bateebe stated, “By generating employment opportunities and promoting skills transfer, the industry contributes to human capital development and poverty reduction.”
The extractives sector is seen as a potential catalyst for economic transformation, with the development of related industries such as energy, manufacturing, and transportation.
However, like other sectors, the success of these initiatives depends on efficient implementation and overcoming challenges related to governance and transparency.
The 2025/2026 NBFP for Uganda embodies both the nation’s aspirations for growth and the challenges it will face in realizing these goals.
While there are clear wins, especially in infrastructure development, tax reforms, and social sector investments, the losses particularly the rising public debt and revenue shortfalls represent significant hurdles.
