Uganda plans to cut external budget support by about 84% in the next financial year starting in July, sharply reducing its reliance on loans and grants from development partners. The move was announced by the finance ministry and reported by Reuters, signalling a shift toward greater domestic financing.
External budget support is projected to fall to 330.9 billion shillings ($92.7 million) in the 2026/27 financial year, down from 2.1 trillion shillings in the current year. Budget support typically helps fund government spending and plug fiscal gaps in low-income economies.
The finance ministry said the government plans to offset the decline by boosting domestic revenue mobilisation, with revenues expected to rise by about 9% to 40.1 trillion shillings. Authorities also plan to reduce domestic borrowing, including a cut of more than 21% in domestic debt issuance, as noted by MarketScreener.
The fiscal adjustment comes as Uganda prepares to start commercial crude oil production, which officials expect will strengthen public finances over time. Analysts, however, caution that the sharp reduction in external funding could strain government programmes if projected revenue gains fail to materialize.
Image Credit: reuters.com
