economy 21 May 2026 Daily Monitor (Uganda)
Uganda's Fiscal Deficit Narrows in April Despite Revenue Shortfalls
Uganda's fiscal deficit for April 2026 significantly narrowed to Shs 264.51 billion, less than projected. This was mainly due to reduced spending on infrastructure and assets, despite underlying issues with revenue collection and increased recurrent expenditures. Source: https://www.monitor.co.ug/uganda/news/national/uganda-s-april-fiscal-deficit-narrows-to-shs264b-despite-major-revenue-shortfalls-5468252
In April 2026, Uganda’s fiscal deficit was reported at Shs 264.51 billion, a notable decrease from the anticipated Shs 452.13 billion. The Ministry of Finance attributed this reduction primarily to lower government spending on major infrastructure projects and other non-financial assets.
Despite the reduced deficit, indicating a temporary easing of government borrowing pressures, the report highlights persistent challenges in revenue generation. Total revenues and grants for the month fell short of the target, reaching Shs 2.718 trillion against a projected Shs 2.718 trillion, a shortfall of Shs 384.10 billion. This underperformance was a result of weaker domestic collections and lower-than-expected external grants.
Domestic revenues collected Shs 2.472 trillion in tax revenue and Shs 191.37 billion in non-tax revenue, totaling Shs 2.664.19 billion, which was 90.8 percent of the target. Tax collections missed their goal by Shs 160.17 billion across direct, indirect, and international trade taxes. Shortfalls in excise duty, VAT, and particularly petroleum duty, which was impacted by geopolitical tensions affecting fuel imports, contributed to the deficit.
Conversely, overall government spending exceeded expectations, reaching Shs 2.818 trillion against a planned Shs 2.588 trillion. This overspending was driven by increased grants to local governments and institutions, including Uganda Airlines, alongside higher spending on civil servant compensation and public goods.
The narrowing of the deficit was largely a consequence of a sharp decline in capital expenditure. Spending on assets like roads and bridges plummeted to Shs 165.23 billion, stalled by bureaucratic delays in disbursing funds for externally financed projects.
Economists express concern that while the smaller deficit offers short-term relief, the combination of declining revenues and rising recurrent spending poses a significant risk to Uganda’s long-term fiscal stability.
Source: Daily Monitor (Uganda)