CSBAG urges govt to prioritise fiscal discipline ahead of 2026 elections

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Civil society has called on the government to strengthen fiscal discipline and rein in election-year spending pressures ahead of the 2026 general elections.

They warned that rising public debt, shrinking external financing and growing food import dependence could undermine recent economic gains.

The call was made by Julius Mukunda, the Executive Director of the Civil Society Budget Advocacy Group (CSBAG), on Thursday during a press conference at the organisation’s offices in Ntinda, Kampala, while releasing CSBAG’s end-of-year economic and fiscal statement for 2025.

Mukunda noted that while Uganda’s economy has shown resilience amid global shocks, underlying fiscal vulnerabilities remain pronounced as the country enters a politically sensitive election period.

According to CSBAG, Uganda’s economy grew by 6.3% in FY2024/25, supported by agriculture, manufacturing, construction and household consumption. Inflation remained stable at an average of 3.5–3.9%, below the Bank of Uganda’s 5% target, helped by favourable food supplies and prudent monetary policy.

Per capita income rose to $1,263 (Sh4.48m) from $1,159 (Sh4.11m) in the previous financial year, pointing to gradual improvements in living standards.

“Despite these positive headline figures, the benefits of growth are not sufficiently reaching ordinary Ugandans,” Mukunda said, noting that weaknesses in public financial management and rising debt service obligations are limiting the government’s ability to fund essential services.

CSBAG’s analysis shows that Uganda’s total public debt has risen to sh116.2 trillion, equivalent to 51.3% of GDP as of June 2025. While the debt level remains below the statutory ceiling, the cost of servicing it has increased sharply, with debt servicing now absorbing more than 31% of domestic revenues.

“For every Sh10,000 collected by the Uganda Revenue Authority (URA), over Sh3,000 goes straight to interest payments,” Mukunda said, warning that debt servicing is increasingly crowding out spending on health, education, agriculture and social protection.

 The civil society organisation also raised concerns about election-year fiscal risks, citing historical trends that show a 30–40% increase in supplementary budget requests during pre-election periods.

CSBAG cautioned that political spending pressures could lead to off-budget expenditures, relaxed procurement controls and the accumulation of domestic arrears, undermining fiscal discipline.

“As the country prepares for elections in January 2026, there is a real risk that short-term political considerations could override long-term development priorities,” Mukunda said, calling on the Ministry of Finance to exercise restraint and enforce strict commitment controls.

CSBAG further highlighted growing vulnerabilities arising from external financing shocks. The organisation noted that the withdrawal of major development partners has affected many development initiatives, including the work of civil society groups.

In 2025, the global development landscape shifted following the closure of the United States Agency for International Development (USAID), which removed an estimated $30b annually from global development financing.

In Uganda, the exit resulted in an estimated 15,000 job losses across NGOs and project agencies. USAID and PEPFAR had previously financed about 60% of Uganda’s HIV/AIDS response, leaving a Sh604b funding gap in the health sector.

In addition, the suspension of GIZ-supported programmes worth Sh22b (€5.5 million) disrupted governance and accountability initiatives ahead of the elections, further constraining civic space and service delivery.

CSBAG also warned that Uganda’s long-held status as the region’s food basket is under threat, with the country increasingly relying on food imports. Analysis of food trade data shows that imports of key staples have surpassed exports over the past decade.

Rice imports alone cost the country about Sh1.55 trillion, compared to exports worth just Sh594 million, while beans shifted from a surplus position to a Sh122b trade deficit.

The fish sector has also weakened, with exports falling from a surplus of Sh117b in 2015 to about Sh4.5b in 2025, as imports rose sharply.

Mukunda warned that rising food import dependence exposes households to price shocks, drains foreign exchange and increases vulnerability during periods of regional trade disruptions and climate-related shocks.

Looking ahead to 2026, CSBAG said the expected onset of oil production presents both an opportunity and a risk. He said more than 150 oil wells have been drilled in the Tilenga and Kingfisher projects, with first oil expected in mid-2026.

However, the organisation cautioned that without strict adherence to the Public Finance Management framework, oil revenues could fuel wasteful spending rather than economic diversification.

While welcoming the World Bank’s decision to lift its lending freeze and approve a $2.76 billion (Sh9.798 trillion) financing package, CSBAG warned the government against excessive borrowing, noting that debt sustainability remains fragile.

Mukunda urged the government to prioritise domestic revenue mobilisation, improve value for money in public spending, and strengthen oversight of state-owned enterprises, several of which have underperformed in dividend remittances despite recording profits.

“Uganda’s challenge is not a lack of plans or growth, but discipline, execution and accountability,” he said.