By Spy Uganda
Parliament has passed the Appropriation Bill, 2026, authorising the Government to raise and spend UGX84.294 trillion for the 2026/27 financial year, marking a UGX12.015 trillion increase from the UGX72.376 trillion approved for 2025/26.
While the expansion signals an ambitious fiscal agenda, the approval was overshadowed by mounting concern over Uganda’s rising public debt and the growing share of the budget committed to debt servicing.
According to the approved estimates, government will spend UGX33.6 trillion, about 40 percent of the total budget, on debt repayment, 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 red flags over the persistent underfunding of domestic arrears, warning that the current allocation risks eroding government credibility with suppliers.
Parliament approved UGX317 billion for domestic arrears in FY2026/27, down sharply 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 required levels.
Domestic arrears, unpaid obligations largely arising from procurement contracts, remain a key fiscal risk, although 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.
The 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 little 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%), debt servicing, UGX14.1 trillion (16.7%), wages and allowances, UGX8.2 trillion (9.7%), operational expenses and UGX2.6 trillion (3.1%), classified expenditure
“These four items alone will consume about 70 percent of the entire budget,” Ssemujju said. “What remains for debate and 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.
Beyond existing obligations, concerns were 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 go toward refinancing maturing debt.
Critics argue that this borrowing cycle risks deepening fiscal vulnerabilities, particularly where loan absorption remains weak.
ICT and National Guidance Minister Chris Baryomunsi dismissed opposition concerns as overly critical, arguing that borrowing is a standard practice globally 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 echoed concerns over government’s 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, with significant allocations to key programmes such as development Plan Implementation UGX35.7 trillion (42%), human Capital Development (health, education, 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 below UGX500 billion.
The passage of the Appropriation Bill underscores a widening tension in Uganda’s fiscal policy: balancing ambitious development goals with rising debt obligations and limited fiscal space.
While government maintains that 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.
