Uganda has announced plans to cut its external budget support by 84% starting in the next financial year, beginning in July 2026. The country’s finance ministry revealed on Wednesday that this support, typically provided in the form of loans and grants, will fall from over $586 million to just $92.72 million, a significant reduction that highlights Uganda’s shifting focus on domestic revenue generation.
While the government did not provide specific reasons for the reduction, officials emphasized that the strategy is part of broader efforts to “boost domestic revenue mobilization.” The shift away from reliance on external funding reflects Uganda’s ongoing economic recovery and its aim to strengthen its fiscal autonomy.
Economic Recovery and Crude Oil Production
Uganda’s economy is projected to grow, with revenue expected to rise by 9% in the 2026–2027 financial year. The country also anticipates a boost from the commencement of crude oil production, which is expected to significantly increase government revenues. Last year, the International Monetary Fund (IMF) forecasted that oil revenue could drive Uganda’s economic growth into double digits.
Plans to Reduce Domestic Debt Issuance
In addition to reducing external budget support, the Ugandan government plans to cut its domestic debt issuance by 21.1% in the upcoming financial year. This move is aimed at alleviating the country’s ballooning public debt and fostering greater financial stability.
