Uganda plans to cut external budget support by 84.2 percent year on year in the next financial year beginning in July, signaling a major shift in its fiscal strategy as the government intensifies efforts to boost domestic revenue, the finance ministry has said.
In a statement shared on social media, the ministry said external budget support, which usually comes in the form of loans and grants from development partners, is projected to fall sharply to 330.9 billion Ugandan shillings, equivalent to about $92.7 million, in the coming financial year. This represents a steep decline from approximately 2.1 trillion shillings in the current fiscal year.
The reduction reflects Kampala’s growing emphasis on self financing as it seeks to reduce reliance on foreign aid and borrowing. Authorities have repeatedly said that strengthening tax collection, broadening the tax base and improving compliance are central to sustaining public spending and managing rising debt levels.
Uganda has in recent years faced mounting fiscal pressures driven by infrastructure spending, higher debt servicing costs and subdued global financing conditions. External lenders have also become more cautious, while some development partners have adjusted their funding priorities amid global economic uncertainty.
The government says the planned cut in external support will be offset by stronger domestic revenue mobilisation, including reforms within the tax administration and measures aimed at stimulating economic growth. However, analysts caution that such a sharp drop in foreign financing could put pressure on key sectors if domestic revenues fall short of expectations.
As Uganda prepares its budget for the new financial year, the move underscores a broader shift toward fiscal independence, even as questions remain over how quickly domestic revenues can scale up to fill the gap left by declining external support.
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