Government has released Shs21.8 trillion for the second quarter of 2026/27, with Shs10.75 trillion allocated to debt and treasury operations, highlighting mounting pressure on public finances as the Shilling weakens and borrowing costs rise.
The government has released Shs21.8 trillion for the second quarter of the 2026/27 financial year, with nearly half allocated to debt and treasury operations, leaving less than half for other government functions and service delivery.
The Shs10.75 trillion allocation accounts for approximately 49.3% of the total release, underscoring the substantial demands placed on public finances by debt obligations and treasury operations.
The release, equivalent to about 26% of the approved annual budget, comes as Uganda faces a weakening Shilling, rising international oil prices and mounting inflationary pressures that prompted the Bank of Uganda (BoU) to raise its benchmark Central Bank Rate to 12% on Wednesday.
Presenting the expenditure figures, Deputy Secretary to the Treasury Patrick Ocailap said the allocations were guided by government work plans, projected domestic revenue collections, available cash resources and anticipated external financing.
“The second quarter expenditure releases, therefore, seeks to sustain macroeconomic activity, protect essential public services, and finance strategic investments,” Ocailap said.
The Ministry of Finance did not provide a detailed breakdown of the Shs10.75 trillion allocation between principal repayments, interest payments and other treasury operations.
The figure cannot be interpreted as interest payments alone.
Nevertheless, the size of the allocation highlights the competing demands on government resources as it seeks to meet financial obligations while funding public services and development projects.
The Ministry has directed accounting officers to operate within expenditure limits communicated in a Treasury circular dated October 8, 2026, and comply with public financial management requirements.
Director of Budget Hannington Ashaba said emerging pressures on inflation, the exchange rate and the external sector required more careful use of public resources.
“Every shilling spent must deliver value for money,” Ashaba said, urging accounting officers to strengthen budget discipline and prevent the accumulation of unpaid bills.
Beyond debt and treasury operations, government allocated Shs2.42 trillion to wages and salaries, Shs376.6 billion to pensions and gratuity, Shs242.5 billion to Parliament, Shs79.5 billion to the Judiciary and Shs21.2 billion to the Office of the Auditor General.
Infrastructure remains a major priority, with the Ministry of Works and Transport receiving Shs1.48 trillion for transport development and maintenance projects.
The Ministry of Energy and Mineral Development was allocated Shs307.1 billion for electricity generation, transmission and rural electrification.
In the health sector, the Ministry of Health received Shs416.5 billion, while National Medical Stores was allocated Shs284.7 billion for essential medicines.
Public universities received Shs209.1 billion, while the Ministry of Education and Sports was allocated Shs154 billion.
Local governments received Shs457.4 billion, including Shs292.8 billion for capital development, while Kampala Capital City Authority was allocated Shs223.8 billion for social services and city development projects.
Government also allocated funds to security agencies, revenue institutions and strategic economic sectors, including agro-industrial development, tourism, science and technology.
The releases come amid concerns about the rising cost of servicing public debt and the effect of currency depreciation on government finances.
A weaker Shilling increases the local-currency cost of external debt denominated in dollars and other foreign currencies, potentially reducing the resources available for other priorities.
The Ministry has provided Shs130 billion for verified salary, pension and gratuity arrears and directed accounting officers to validate payments, control commitments and prevent new arrears from accumulating.
The second-quarter allocations will test government's ability to balance debt obligations with investment and service delivery while ensuring that released funds translate into completed projects and tangible benefits for citizens.