Government has released Shs 21.82 trillion for the second quarter of the 2026/27 financial year, with nearly half earmarked for debt and treasury operations amid pressure on the shilling, rising fuel prices and a widening trade deficit.
Patrick Ocailap, the Acting Permanent Secretary and Secretary to the Treasury, said the release was intended to sustain economic growth, protect essential public services and finance strategic investments while maintaining fiscal discipline.
“The total quarter 2 release for FY 2026/27 amounts to Shs 21.82 trillion, equivalent to approximately 26 percent of the approved annual budget,” Ocailap said.
Of the total, Shs 10.75 trillion has been allocated to debt and treasury operations, Shs 2.42 trillion to government wages and salaries, and Shs 376.6 billion to pensions and gratuity.
The release comes amid renewed depreciation pressures on the Ugandan shilling, which has weakened by six per cent against the US dollar since the beginning of August, falling below Shs 4,000 to the dollar.
Annual headline inflation also rose from 4.0 per cent in July to 4.6 per cent in September, largely driven by higher transport and energy costs following increases in international oil prices.
Ocailap said the government had taken into account rising external financing costs, exchange-rate pressures and higher petroleum prices when determining spending priorities for the quarter.
He said the government would contain non-essential expenditure while protecting critical services and investments in sectors expected to drive economic growth, exports and job creation.
The Ministry of Works and Transport has been allocated Shs 1.48 trillion for infrastructure development and maintenance, including projects involving Uganda Airlines, Uganda Railways and the Standard Gauge Railway.
The Ministry of Defence and Veteran Affairs will receive Shs 414.7 billion, while the Uganda Police Force has been allocated Shs 74.9 billion and the Uganda Prisons Service Shs 92.2 billion.
In the health sector, the Ministry of Health will receive Shs 416.5 billion to meet operational expenses, procure vaccines and purchase ambulances for constituencies that have not yet received them.
National Medical Stores has been allocated Shs 284.7 billion to procure essential medicines, while Shs 165.5 billion has been provided for the Uganda Cancer Institute and Uganda Heart Institute to support operations and specialised healthcare services.
Public universities will receive Shs 209.1 billion, while the Ministry of Education and Sports has been allocated Shs 154.6 billion.
The National Council of Sports will receive Shs 260.5 billion to accelerate preparations for the 2027 Africa Cup of Nations, which Uganda will co-host with Kenya and Tanzania.
Local governments have been allocated Shs 457.4 billion, comprising Shs 164.6 billion in conditional and unconditional grants and Shs 292.8 billion for capital development.
The budget release comes against a mixed economic outlook, with rising export earnings and remittances being offset by faster growth in imports.
According to the Treasury, Uganda’s merchandise export earnings reached $2.89 billion in July and August 2026, representing a 23.9 per cent increase compared with the same period in 2025.
However, the import bill rose by 44.8 per cent to $3.94 billion during the first two months of the financial year.
Consequently, the merchandise trade deficit widened to $1.04 billion in July and August 2026, up from $383.07 million during the corresponding period a year earlier.
Remittances from Ugandans working abroad increased by 31.6 per cent to $2.9 billion in the year ending June 2026, compared with $2.2 billion in the previous year.
Foreign exchange reserves stood at $6.7 billion as of October 6, equivalent to 3.74 months of import cover, excluding oil project-related imports.
The Treasury said the government would promote exports through value addition, agro-processing, mineral development, economic diplomacy and improved access to regional and international markets.
Ocailap said accounting officers must ensure public expenditure remains within approved budget limits and that released funds translate into measurable improvements in service delivery.
Under the budget execution rules, government institutions must observe five principles: no budget, no commitment; supplementary budgets are exceptional; zero tolerance for arrears; no ready project, no budget; and no wage provision, no recruitment.
The government has also announced the elimination of state-funded celebrations on public holidays, with religious holidays remaining an exception in line with presidential guidance.
Other measures include centralising counterpart funding for externally financed projects, taking steps to operationalise a contributory public service pension scheme and strengthening electronic government procurement to improve accountability and curb corruption.
The Treasury has provided Shs 130 billion to clear verified salary, pension, gratuity and utility arrears, while warning accounting officers against accumulating new arrears.
Ocailap said every shilling released must contribute to timely implementation, improved service delivery and measurable results.
“Accounting Officers must ensure value for money, timely procurement and execution, and strict accountability for the resources released,” he said.
Uganda’s economy grew by 6.4 per cent in the 2025/26 financial year, up from 6.3 per cent in the previous financial year.
The Treasury projects economic growth of 7.6 per cent in 2026/27 and 9.1 per cent in 2027/28, supported by anticipated commercial oil production, investment and export growth.
However, Ocailap warned that the timing of oil production and developments in the global economy remained risks to the outlook.
The government plans to prioritise agro-industrialisation, tourism, mineral-based development, and science, technology and innovation while maintaining fiscal and debt sustainability.
Ocailap said the government would continue implementing reforms aimed at reducing the cost of doing business and encouraging domestic and foreign investment.
He added that regular updates on budget implementation and economic performance would be published to strengthen public accountability.