The minister has attributed the low growth rate on effects of climate change and environment degradation.
The growth rate of the country's economy is now at 3.9% slightly below last financial year's growth rate of 4.6%.
According to the minister of finance, Matia Kasaija, the size of the economy is projected to rise to sh90 trillion, an equivalent of $25.7b.
"This represents a real annual economic growth rate of 3.9%," he said during the presentation of the 2017/2018 budget at Serena Hotel conference centre in Kampala on Thursday.
The theme of the budget is , "Industrialisation for job creation and shared prosperity".
Kasaija said government had project the economy to grow at 5.5% but they have not achieved the target.
The minister has attributed the low growth rate on effects of climate change and environment degradation, which have combined to undermine the food security chain in the country and the agriculture sector, which is largely the fulcrum that moves the largest portion of homesteads in the country.
High interest rates and non-performing loans are the other sectors that Kasaija said have frustrated the public sector growth in the country.
"Civil conflicts in parts of the East African region. This has disrupted export markets for our goods and services. These conflicts have led to influx of refugees into Uganda, putting pressure on our social amenities," the minister said.
"Undue delays and inefficiency in execution of Government programmes and projects. These have dampened anticipated positive impact on the economy," he added.
Corruption, which he said has held back projects and programmes in some sectors, is the other core frustrating factor that the minister has blamed for the lowly growth rate that the country has registered.
"This disease has turned into cancer, which has hampered service delivery," he lamented.