Parliament has passed the Appropriation Bill, 2026, authorising the government to raise and spend UGX84.294 trillion for the 2026/27 financial year—an increase of UGX12.015 trillion from the UGX72.376 trillion approved for 2025/26.
While the expanded budget signals an ambitious fiscal agenda, its approval has been overshadowed by growing concern over Uganda’s rising public debt and the increasing share of resources committed to debt servicing.
Under the approved estimates, government will spend UGX33.6 trillion—about 40 percent of the total budget—on debt repayment. This comes at a time when the national debt stock stood at UGX126.18 trillion as of December 2025.
Presenting the Budget Committee report, Vice Chairperson Remigio Achia (Pian County) raised concerns over the persistent underfunding of domestic arrears, warning that the current allocation could erode government credibility with suppliers.
Parliament approved UGX317 billion for domestic arrears in FY2026/27, a sharp drop from UGX1.4 trillion in FY2025/26, despite the Auditor General placing the outstanding stock at UGX8.4 trillion.
“Government could take decades to clear arrears at the current rate of payment,” Achia cautioned, noting that annual allocations have historically averaged about UGX200 billion—far below the required levels.
Domestic arrears, largely unpaid obligations arising from procurement contracts, remain a key fiscal risk. However, the Auditor General reported a 39.1 percent decline in arrears, from UGX13.8 trillion in FY2023/24 to UGX8.4 trillion in FY2024/25.
A minority report presented by Shadow Finance Minister Ibrahim Ssemujju Nganda and Lulume Bayiga painted a more pessimistic picture, arguing that the structure of the budget leaves limited room for transformative investment.
Ssemujju told Parliament that debt servicing, wages, and administrative costs will consume the bulk of public resources: UGX33.6 trillion (40%) for debt servicing, UGX14.1 trillion (16.7%) for wages and allowances, UGX8.2 trillion (9.7%) for operational expenses, and UGX2.6 trillion (3.1%) for classified expenditure.
“These four items alone will consume about 70 percent of the entire budget,” Ssemujju said. “What remains for development is roughly UGX25.7 trillion. This is a highly constrained budget that requires serious restructuring if it is to deliver meaningful impact.”
The minority further warned that debt repayment costs are rising sharply—from UGX27.5 trillion in FY2025/26 to UGX33.2 trillion in FY2026/27—with cumulative interest payments projected to reach UGX46.9 trillion over six years.
Concerns were also raised over government’s continued reliance on borrowing to finance the budget. Government plans to raise UGX25.9 trillion from the domestic market, including commercial banks and pension funds. Of this, UGX11.97 trillion will finance the budget deficit, while UGX13.9 trillion will be used to refinance maturing debt.
Critics argue that this borrowing cycle risks deepening fiscal vulnerabilities, particularly given weak loan absorption.
ICT and National Guidance Minister Chris Baryomunsi dismissed the opposition’s concerns as overly critical, arguing that borrowing is a standard global practice and necessary for development.
“The issue is not borrowing per se, but how the borrowed funds are utilised,” Baryomunsi said. “As Parliament, we must ensure that every shilling borrowed delivers value.”
However, Leader of the Opposition Joel Ssenyonyi described Uganda’s debt trajectory as “alarming,” citing poor planning and inefficiencies in loan utilisation.
“In many cases, funds are borrowed before projects are ready, leaving money idle while interest accumulates,” Ssenyonyi said. “At the same time, corruption continues to drain public resources, worsening the debt burden.”
He rejected comparisons with other economies, arguing that Uganda’s borrowing lacks discipline and strategic alignment.
Speaker Anita Among also raised concerns over borrowing practices, particularly the failure to conduct feasibility studies before securing loans.
“As a House, we agreed that borrowing should follow proper planning—feasibility studies and designs must come first,” Among said. “But what is happening is the reverse: funds are borrowed first, and planning comes later. That is what is creating these challenges.”
The approved budget prioritises implementation of the National Development Plan IV (NDP IV), with significant allocations to key programmes, including development plan implementation (UGX35.7 trillion, 42%), human capital development—covering health, education, and social services (UGX13.5 trillion), governance and security (UGX10.2 trillion), and transport infrastructure (UGX8.8 trillion).
However, sectors such as digital transformation, housing, industrial development, and public sector reform received comparatively modest funding, each allocated less than UGX500 billion.
The passage of the Appropriation Bill highlights a growing tension in Uganda’s fiscal policy—balancing ambitious development goals with rising debt obligations and limited fiscal space.
While government maintains the budget will drive growth under the NDP IV framework, critics warn that without stronger oversight, improved project execution, and stricter fiscal discipline, the increasing cost of debt could constrain service delivery and long-term economic transformation.
