2025/26 budget estimates shoot to sh71.7 trillion

KAMPALA - The 2025/26 budget estimate has risen from sh66 trillion to sh71.7 trillion, according to the latest estimates tabled in Parliament by finance state minister (general duties) Henry Musasizi. 

The increment came two weeks after Parliament passed and approved the National Budget Framework Paper for financial years 2025/26- 2029/30 — where the estimate for the financial year 2025/26 is sh57.4 trillion. 

Earlier in February, finance permanent secretary and Secretary to the Treasury Ramathan Ggoobi in a Second Budget Circular dated February 13, 2025, informed all accounting officers that the Government had increased the 2025/6 budget by sh8.6 trillion, pushing the total figure to sh66trillion. 

According to the estimates, the recurrent expenditure increased from sh29.2 trillion to sh36.2 trillion, accounting for 62.2% of the total budget estimates while development expenditure increased from sh17 trillion to sh18.3 trillion. 

Musasizi, while tabling the estimates in Parliament and tax bills, said the increase is aimed at addressing crucial issues that were raised by Cabinet, Parliament, the National Resistance Movement (NRM) Parliamentary Caucus and the Presidential Advisory Committee on the Budget. 

Musasizi said when the Budget Framework Paper which was approved by Parliament in February 2025, a number of recommendations from Parliament had not been incorporated. 

“We have also addressed other critical policy commitments, mainly in domestic arrears, agriculture, health, education/sports (including AFCON 2027), general election roadmap, wage shortfalls in local governments and unfinished infrastructure projects due to counterpart funding amidst the constrained fiscal space,” Musasizi informed the House. 

He said the increment is as a result of projected increase inflows such as domestic revenue collection, budget support, net domestic borrowing, domestic refinancing, local revenue for local governments, among other sources of funds.
 
He said the economic growth strategy for 2025/26 is to grow the size of the economy tenfold to $500b (sh1,900 trillion) by the year 2040, up from sh$59.3b (sh214 trillion) projected by the end of June 2025. 

Musasizi told Parliament that the total resource envelopment available to finance programmes after considering domestic arrears, and domestic debt repayment is sh43.4 trillion compared to sh33.5 trillion at the time of the Budget Framework Paper.

Last year's budget 

The 2024/25 fi nancial year budget started with sh52.7 trillion in the framework paper. It grew to sh54.5 trillion in the draft estimates and sh58 trillion in the Appropriation Bbill, finally becoming sh72 trillion in the last-minute corrigenda.

Finance permanent secretary and Secretary to the Treasury Ramathan Ggoobi.

Items causing the increase 

Significant in the budget is the allocation of sh1.4 trillion to address the problem of domestic arrears from sh200b that was allocated in the Budget Framework Paper. 

According to statistics, as at June 30, 2024, total public debt stock stood at sh94.9 trillion. 

The Government in 2025/26 financial year had allocated only sh200b to clear arrears. 
The MPs, however, said the allocation falls short of the domestic arrears verified by the Auditor General (AG). 

In his report to Parliament, the AG, Edward Akol, said domestic arrears were over sh14 trillion, of which sh8.312 trillion are reimbursement to Bank of Uganda, leaving sh5.7 trillion for unpaid invoices, pension and gratuity. 

“The committee observes that some of these arrears are the result of the finance ministry’s failure to release resources for contractual obligations that are partially paid, so certificates remain pending leading to accumulation of arrears,” the committee report states. 

The report was presented to Parliament by the committee deputy chairperson Remigio Achia (Pian County). 

The MPs also said arrears are an indication that the financial system has gaps which allow commitments or obligations to be made without having sufficient funds set aside to honour their payment, which negatively impacts the credibility of the budget. 

“Good fiscal management and budget planning should prevent arrears from being created. Therefore, the Government should allocate additional resources to clear arrears in the budget for financial year 25/26. This trend in domestic arrears ought to be managed strategically to reduce the risk of increased government debt,” the committee report states. 

The finance ministry also increased the budget allocation for amortisation from sh4 trillion to sh4.9 trillion. 

Amortisation refers to the principal amount of the debt being repaid in instalments over the life of the loan. It can be contrasted with bullet repayment. Domestic debt refinancing was increased from sh6.6 trillion to sh10 trillion.

Debt refinancing is a financial strategy that allows individuals or businesses to replace an existing debt with a new one, often with better terms. 

The Government has also allocated sh493b to cater for Bank of Uganda’s domestic debt payment and increased appropriation in aid/local revenue allocation from sh293.9b to sh319.4b. 

Over sh500b has been allocated to the Electoral Commission for elections. The ministry has also allocated sh209b to National Identification and Registration Authority for the procurement of identity cards and machines, sh173b to cater for wage and gratuity shortfall in local government.
 
According to the Appropriation Bill, 2025 tabled for first reading by Musasizi on Thursday, defence has been allocated sh3.7 trillion. 

This includes sh1.7 trillion for recurrent expenditures such as salaries and operations, along with sh2 trillion for development projects. 

Infrastructure development remains a top priority, with the works and transport ministry receiving sh5.6 trillion. 

In the energy sector, sh1.5 trillion has been allocated to advance oil refinery development, renewable energy projects and mineral exploration initiatives. 

The health sector has been allocated sh1.3 trillion in development funding, including sh103.8b for upgrades to Mulago Hospital and sh91.5b for the Uganda Cancer Institute. 

An additional sh204.7b is earmarked for recurrent health expenditures. Education receives sh497.1b for recurrent costs and sh322.9b for development projects. 

Makerere University has been allocated sh33.9b to support its academic programmes and infrastructure. Agriculture is set to receive sh611.5b for development projects and sh188.1b for recurrent expenditures. 

These funds will support agricultural research, livestock development and fisheries management programmes nationwide.

Finance state minister (general duties) Henry Musasizi.

Source of funding 

According to the budget documents tabled in the House, the budget will be financed through domestic resources sh48.5 trillion, external resources sh13 trillion, budget support sh1.4 trillion, project support, sh11.9 trillion. 

The Deputy Speaker of Parliament, Thomas Tayebwa, who chaired the session, referred the estimates to the committee on the budget.

Reactions 

Kira municipality MP Ibrahim Ssemujju Nganda, who is also the Opposition shadow minister for finance, doubted some of the statistics provided, saying a lot was just speculation. 

“When you look at the additional allocation schedule, they claim tax collection will grow, which is a lie. The revenue mobilisation strategy says and other relevant laws require preparation of budget on sound micro-economic analysis and forecasts. What these fellows are involved in is speculation,” he said. 

“Mind you the biggest portion of the budget is debt repayment. When you subtract wages, there is absolutely no money to finance the country’s development agenda,” Ssemujju added. 

Kampala City Traders Association chairman Thadeus Musoke welcomed the increased allocation towards the clearing of domestic arrears, saying it will help relieve many businesses that were on the verge of collapse. 

“Many government suppliers are on the verge of losing their properties because they need money to do business. They supply the Government, but the Government instead delays in paying them. I am happy now that at least they have increased the budget which means many will be paid. But government should also adjust and make timely payments,” he said. 

Julius Bakunda, the executive director of the Civil Society Budget Advocacy Group (CSBAG), cautioned that it was too early to determine the final stance on the budget.
 
“We have had three sets of figures and I doubt that the sh71.9 trillion is the final estimate since it remains a proposal subject to change before April when the final budget estimates are submitted to Parliament. We are likely to see further adjustments,” he said. 

“But I am happy that the budget for domestic arrears has been increased from sh200b to sh1.4trillion,” the executive director of CSBAG said.