Uganda Announces 84% Cut in External Budget Support Starting July. Kampala, Uganda — The Ugandan government has announced plans to reduce external budget support by 84 per cent, effective from the beginning of the next financial year in July.
The finance ministry revealed on Wednesday that the budget support, which usually consists of loans and grants, is expected to decrease from over $586 million to $92.
72 million.
According to official statements, the government has not provided a specific reason for the reduction but emphasized its commitment to “implementing strategies to boost domestic revenue mobilisation.”
The economy of Uganda is currently on a recovery path, with projections indicating a 9 per cent increase in revenue during the 2026 to 2027 financial year.
The nation is also looking forward to commencing crude oil production this year, which the International Monetary Fund (IMF) predicted could significantly boost economic growth.
The government also intends to reduce its domestic debt issuance by 21. 1 per cent next financial year to address its growing public debt.
The World Bank has previously highlighted that approximately 84 per cent of all external funding for the health sector in Uganda is off budget, which limits resource allocation flexibility.
The IMF has identified challenges with fiscal revenue and deficit targets in Uganda, reflecting lower — than-expected growth and election effects.
The finance ministry’s announcement is seen as a strategic move to reduce dependence on external financing, potentially increasing economic sovereignty and promoting self-sufficiency.
However, concerns have been raised about the sustainability of the fiscal deficit financing, with the possibility of increased domestic borrowing or other economic challenges.
The implications of the 84 per cent cut in external support on Uganda’s economy and its various sectors, particularly health, are yet to be fully understood.
The government’s ability to finance the fiscal deficit without external support and the measures it will take to ensure economic stability remain unclear.
Further details are expected as the situation develops.
*Additional reporting by ImNews | Sources consulted: 3*
