Uganda has announced plans to dramatically reduce the amount of external budget support it receives, signaling a shift toward greater financial self-reliance. Starting in July, at the beginning of the next financial year, foreign-funded assistance to the national budget is expected to drop sharply.
According to the finance ministry, the move reflects a broader strategy to strengthen internal revenue generation and manage rising public debt.
Major Drop in Foreign Assistance
Government projections show that external budget support, which includes both loans and grants, will fall by 84 percent compared to the current year. The total amount is expected to decline from more than 586 million dollars to just under 93 million dollars.
While officials did not provide a detailed explanation for the cut, they emphasized that reducing dependence on external funding is part of a long-term plan to build a more sustainable fiscal framework.
Revenue Growth and Economic Recovery
Uganda’s decision comes as the economy shows signs of recovery. Authorities forecast that domestic revenue will increase by about nine percent in the 2026–2027 financial year, supported by improved tax collection and economic activity.
The government is also preparing to begin crude oil production, a milestone expected to significantly boost state revenues. International financial institutions have previously suggested that oil exports could push Uganda’s economic growth rate into double digits once production is fully underway.
Debt Management and Fiscal Strategy
Alongside the reduction in foreign support, Uganda plans to scale back domestic borrowing. The finance ministry says issuance of local debt will be cut by more than 21 percent in the coming financial year as part of efforts to slow the growth of public debt.
Officials argue that combining stronger domestic revenues, new income from oil, and tighter borrowing controls will help stabilize public finances and reduce long-term fiscal risks.
