With a population of approximately 46 million people, Uganda has officially moved out of the Least Developed Countries category and is now classified as a Lower Middle-Income Country.
The Minister of Finance and Economic Development, Minister Matia Kasaija, delivered the national budget speech for the 2025/26 financial year.
The Budget FY 2025/26 was themed “Full Monetization of the Ugandan Economy through Commercial Agriculture, Industrialization, Expanding and Broadening Services, Digital Transformation and Market Access.”
In his remarks during the budget reading on 12th 06 2025 at Kololo Ceremonial Grounds, President Yoweri Museveni emphasized the significant progress Uganda has made over the decades.
He noted that the size of Uganda’s economy by the exchange rate method now stands at $61 billion and $174 billion in purchasing power parity (PPP) terms.
Reflecting on historical progress, the President reminded the nation that in 1986, Uganda’s GDP was only $3.9 billion, indicating that the economy has grown more than 20 times since then.
He also urged Ugandans to appreciate this transformation and see the “big picture,” underscoring the importance of long-term vision and economic fundamentals.
Strong Economic Fundamentals
The President outlined the key indicators of a healthy economy, describing them as “economic fundamentals.” These include consistent GDP growth, price stability, and sound macroeconomic management.
He emphasized that Uganda has maintained stability in prices and inflation, creating a solid foundation for long-term prosperity.
According to him, Uganda’s economy is not just growing in size, but is also demonstrating resilience and structural transformation.
Big Boost for Agriculture and Agro-Industrialization
Agriculture emerged as one of the biggest winners in this year’s budget, receiving a significant allocation of UGX 1.59 trillion.
This investment is part of Uganda’s strategy to transform subsistence farming into a commercially viable sector.
The funds will support irrigation development, increased mechanization, improved storage, and agro-processing.
Specific investments will go into completing irrigation schemes in several districts, boosting access to quality inputs through Operation Wealth Creation, and expanding the Parish Development Model to help local farmers monetize their output.
This aligns with Uganda’s long-term Vision 2040, which identifies agriculture as a primary driver of inclusive economic growth.
Infrastructure and Energy Receive Continued Support
Infrastructure development also received notable attention in the budget. The government has allocated UGX 4.4 trillion to works and transport, a move aimed at enhancing regional connectivity, promoting trade, and reducing transport costs.
Priority projects include the construction and upgrading of national roads, rehabilitation of existing ones, and continued support for the Standard Gauge Railway and the rehabilitation of the Meter Gauge Railway.
The energy sector, vital for powering industrialization and rural transformation, was allocated UGX 1.2 trillion. This includes continued investments in electricity transmission and rural electrification.
Minister Kasaija emphasized that expanding access to affordable and reliable power is key to attracting manufacturing and boosting value addition across sectors.
Oil and Gas Progress on Track
Uganda’s oil and gas sector remains on course to begin oil production by 2025/26, with budget allocations aimed at fast-tracking infrastructure required for commercialization.
Key investments include the construction of the East African Crude Oil Pipeline (EACOP), the development of the Kingfisher and Tilenga oil fields, and the operationalization of the Uganda National Oil Company.
These projects are expected to significantly increase Uganda’s revenues and position the country as a regional energy hub.
Investment in Science, Technology, and Innovation
Recognizing the importance of a knowledge-based economy, the government has prioritized science, technology, and innovation in the FY2025/26 budget.
A total of UGX 296 billion has been allocated to support research and innovation at the Uganda National Council for Science and Technology and other institutions.
The government will also continue supporting innovation hubs, ICT incubation centers, and skills development for youth under the Presidential Initiative on Skilling the Girl Child and other similar programs.
Education and Health Get a Slight Boost
The education sector has been allocated UGX 2.9 trillion, with funding targeting universal access to quality education.
Investments will go into constructing classrooms, recruiting more teachers, and supplying scholastic materials.
The government also reaffirmed its commitment to the rationalization of public universities and continued implementation of free education at the primary and secondary levels.
The health sector received UGX 2.3 trillion, aimed at improving service delivery, reducing maternal and child mortality, and enhancing disease surveillance.
Part of this funding will go into upgrading health center infrastructure, training health workers, and procuring essential medicines.
The government also plans to operationalize more regional referral hospitals and complete stalled projects in underserved areas.
Tourism, Trade, and Industrialization Prioritized
Uganda is placing renewed focus on tourism, trade, and industrialization. The tourism sector, recovering steadily from the COVID-19 downturn, will benefit from targeted investments in destination branding, infrastructure improvement, and tourism marketing.
In trade and industry, the government will support small and medium enterprises (SMEs), promote export diversification, and expand industrial parks in various parts of the country to boost job creation.
Manufacturing has also been prioritized, with a strategic focus on supporting industries that process Uganda’s raw materials into higher-value products.
Initiatives include subsidizing industrial power tariffs, improving access to industrial finance, and supporting local manufacturing of goods such as cement, fertilizers, and pharmaceuticals.
Digital Transformation Accelerated
As Uganda accelerates its digital economy agenda, the FY2025/26 budget includes UGX 215 billion for digital transformation initiatives.
These will support the rollout of internet infrastructure, expansion of e-government services, and promotion of digital skills across sectors.
The government also aims to digitize public service delivery systems to improve efficiency, accountability, and citizen engagement.
Environmental Sustainability and Climate Resilience
With increasing climate-related shocks affecting Uganda’s economic performance, environmental sustainability has received renewed attention.
The government has committed UGX 279 billion to programs promoting climate resilience, afforestation, and sustainable land management.
Minister Kasaija stressed the importance of safeguarding Uganda’s natural capital while transitioning to a green economy. Support will go to wetland restoration, climate-smart agriculture, and early warning systems.
Financing the Budget and Debt Management
Uganda’s FY2025/26 national budget stands at UGX 72.1 trillion. Of this, domestic revenue is projected to contribute UGX 32.4 trillion, while the rest will be sourced from grants, loans, and domestic borrowing.
The Uganda Revenue Authority (URA) has been tasked with expanding the tax base, improving compliance, and leveraging digital tools to increase collections.
New tax measures include adjustments to excise duties and measures aimed at closing loopholes in corporate tax administration.
The government remains committed to maintaining fiscal discipline and ensuring that public debt remains sustainable.
Minister Kasaija noted that Uganda’s public debt-to-GDP ratio stands within safe thresholds, and debt servicing has been prioritized in the FY2025/26 plan.
To reduce reliance on borrowing, efforts are being made to improve efficiency in public spending and deepen domestic resource mobilization.
Governance, Accountability, and Public Service
A total of UGX 1.4 trillion has been allocated to public sector management, covering governance, anti-corruption measures, and institutional reforms.
The government has reiterated its commitment to improving transparency and accountability in public financial management.
Key reforms include the digitization of government payment systems, strengthening oversight institutions, and operationalizing anti-corruption courts.
Vision 2040 and Strategic Direction
Uganda’s FY2025/26 budget is aligned with the broader Vision 2040 agenda and the Fourth National Development Plan (NDP IV), which seeks to transition the country into a modern and prosperous society.
The strategy emphasizes full monetization of the economy, expansion of regional markets, value addition, and industrial transformation.
The government remains committed to inclusive growth, youth employment, and building a self-sustaining economy driven by production, productivity, and innovation.
Economic Outlook and Conclusion
Minister Kasaija noted that Uganda’s economy has demonstrated resilience, registering an estimated growth of 6% in FY2024/25 despite global economic pressures.
In FY2025/26, growth is projected to rise to 6.4%, driven by oil investments, industrial growth, infrastructure development, and improved agricultural output.
Inflation has remained within the 5% target, while exchange rate stability and interest rate moderation are expected to continue supporting private sector activity.
Uganda’s FY2025/26 budget reflects a strong focus on transforming the economy through production, value addition, and market access.
While agriculture, infrastructure, oil and gas, and digital transformation received the most significant allocations, sectors like health and education also got a moderate boost.
As implementation begins, the effectiveness of this budget will depend on timely disbursement, efficient service delivery, and rigorous monitoring of public investments.