By CPA Benard Bwire
Uganda is managing its largest-ever national budget of UGX 72.136 trillion for Financial Year 2025/26 designed to serve a population approaching 48 million. The economy recorded 8.5 per cent growth in the second quarter of FY2025/26, a welcome acceleration that signals productive capacity is expanding. Yet public debt now stands at UGX 130.84 trillion, equivalent to 52.4 per cent of GDP. According to the Ministry of Finance’s Report on Public Debt FY2024/25, the debt service burden amounted to 31.5 per cent of revenue as of June 2024 and is projected to remain above 20 per cent throughout the medium term meaning that for every UGX 100 collected in tax, more than UGX 30 goes to debt repayments. The central question facing policymakers, the accounting profession, and Uganda’s citizens is not whether public finance management matters, but whether the country’s systems can convert ambitious budgets into measurable results.
According to the UBOS Uganda National Household Survey 2023/24, the national poverty rate fell from 20.3 per cent to 16.1 per cent between 2019/20 and 2023/24, using the cost-of-basic-needs methodology meaning 1.3 million fewer Ugandans were living in poverty compared to four years earlier. That progress is real. But 7 million Ugandans remain poor in a country whose population grows at 3.3 per cent annually. The new PFM Reform Strategy 2025–2030 has been launched. Programme-based budgeting has achieved its best-ever compliance score. Revenue collection is on a steep upward curve. This is the moment to assess honestly what has worked, what has not, and what a credible path forward looks like. The 4th PFM Conference, organised by ICPAU and scheduled for 6–8 May 2026 in Entebbe, is the platform for that assessment.
A Budget That Must Work Harder
At UGX 72.136 trillion, the FY2025/26 budget anticipates 7 per cent real GDP growth, targeting a per capita income of USD 1,324. These are not modest ambitions they require every shilling allocated to produce a corresponding output. Yet the Auditor General’s Annual Report for FY2023/24 found that only 47 per cent of sampled outputs across Ministries, Departments, and Agencies were fully implemented; 51 per cent were partially implemented and 2 per cent not implemented at all. More than half of what government planned to deliver with public money was either incomplete or undelivered.
Several structural factors explain why this implementation gap persists. Budget absorption is frequently constrained by delayed procurement processes: goods and services cannot be delivered when tenders stall for months in review. The 2022 Public Expenditure and Financial Accountability (PEFA) Assessment rates Uganda’s Public Investment Management at D+, indicating that project appraisal and selection do not conform to good practice projects are approved without adequate feasibility work, then stall during execution. Political economy dynamics compound the problem: supplementary budget requests and mid-year vote re-allocations disturb original spending plans, redirecting resources away from programmes that were carefully costed toward expenditures that follow shorter political time horizons. The Semi-Annual Budget Performance Report for FY2023/24 illustrates the severity externally financed project support performed at only 33.1 per cent at mid-year, primarily because projects were not ready for execution.
Equally significant is an incentive misalignment at the heart of Uganda’s PFM architecture. The system currently rewards compliance moving money through the system rather than output delivery. This compliance-versus-performance gap is not unique to Uganda, but it is particularly acute here. The PEFA 2022 assessment notes that “the capacity for enforcing the existing regulatory framework is still weak.” Without credible sanctions for non-delivery, and without a formal performance metric to track output outcomes, the cycle is self-perpetuating: ambitious plans are approved, partially executed, and then replaced by new plans the following year, with limited institutional memory of what went wrong or who bore responsibility.
On the debt front, Uganda’s total public debt of USD 34.86 billion has prompted the IMF to classify the country at “moderate risk of debt distress.” The Ministry of Finance’s own analysis confirms that debt service costs will remain above 20 per cent of domestic revenues throughout the medium term. The government has signalled its intent to cut domestic borrowing by 21 per cent in FY2026/27 a commitment that will require consistent implementation to maintain credibility.
The Reform Foundation: What Has Been Built?
It would be a mistake to read the preceding analysis as a counsel of despair. Uganda has built a credible reform foundation over two strategy cycles. The PFM Reform Strategy 2018–2025 delivered measurable gains: the share of PEFA indicators at good practice rose from 41 per cent in 2006 to 50 per cent in 2022, with 15 of 31 indicators now rated A or B. That trajectory, while uneven, is evidence that sustained institutional investment in PFM produces results.
The Integrated Financial Management System has been central to this progress. The 2022 PEFA Assessment concludes that “IFMS enables the production of timely, comprehensive and reliable reports” and that “revenue handling, controls and reporting are strengthening, leveraging on improved IFMS operations and upgrades.” The system now processes the vast majority of central government transactions, providing an audit trail that was simply unavailable a decade ago.
Revenue mobilisation tells a similarly encouraging story. URA collected UGX 25.209 trillion in FY2022/23, achieving 100.23 per cent of its target a 16.4 per cent increase over the previous year. The tax register expanded from 3.5 million taxpayers at end of FY2022/23 to over 5.2 million by June 2025, and the revenue target for FY2025/26 stands at UGX 37.227 trillion. These numbers represent a growing capacity to finance development from domestic resources the only sustainable path for a country that cannot afford permanent dependence on external borrowing.
Programme-Based Budgeting: From Policy to Practice
Programme-based budgeting (PBB) is the mechanism through which Uganda seeks to connect money to outcomes. Rather than funding institutions by line item, PBB allocates resources to defined programmes with stated objectives, outputs, and performance indicators. When it works, it enables Parliament and citizens to ask a direct question: what did this spending achieve?
At an event organised by the Institute of Certified Public Accountants of Uganda (ICPAU) in April 2025, Dr. Joseph Muvawala, Executive Director of the National Planning Authority, reported that national budget alignment with the Third National Development Plan had reached 73 per cent, the first satisfactory rating in Uganda’s planning history. That figure means nearly three-quarters of the budget is now structured around nationally agreed priorities. But 27 per cent remains outside that alignment framework, a gap that represents the next frontier for PBB reform, requiring stronger programme compliance at the local government level and more disciplined application of programme logic across all votes.
Taken together, these indicators suggest that PBB has moved from an aspirational framework to a measurable accountability tool. The challenge ahead is to pair the planning architecture with a performance measurement system capable of holding institutions accountable for results. That is where the Output Delivery Ratio becomes critical.
The Numbers That Demand Attention
Several fiscal indicators warrant direct scrutiny. Uganda’s tax-to-GDP ratio stands at 13.6 per cent in FY2023/24, against a Domestic Revenue Mobilisation Strategy target of 16–18 per cent and an African continental average of 16.0 per cent. That 2.4 percentage-point gap between Uganda’s current performance and the continental average represents forgone revenue equivalent to trillions of shillings annually. Of the 5.2 million registered taxpayers, the Auditor General’s analysis suggests only approximately one million are fully tax-compliant, a structural challenge that undermines the entire revenue architecture and points to deep gaps in enforcement, taxpayer education, and data integration.
Public debt continues to command attention. At UGX 130.84 trillion, 52.4 per cent of GDP and classified by the IMF at moderate risk of distress, the debt stock is not yet critical but the trajectory demands vigilance. The Auditor General identified excess gratuity payments of UGX 22.393 billion to 1,502 pensioners across 19 MDAs and 115 local governments as a symptom of weak expenditure controls that directly erode fiscal discipline and undermine public trust.
Domestic arrears represent a further structural constraint. According to the MoFPED Budget Execution Circular FY2025/26, the government has put in place a three-year strategy to eliminate the current stock of domestic arrears, starting FY2025/26. The FY2025/26 budget allocated UGX 1.4 trillion to this effort, up from UGX 200 billion the previous year. Parliament’s Finance Committee has noted that audited consolidated domestic arrears stood at UGX 5.748 trillion as of June 2024, with the Auditor General continuing verification of a larger claimed figure. At any point on this spectrum, the arrears stock represents a significant drag on private sector liquidity and supplier confidence.
What the Next Phase Requires
The analysis above points to a PFM architecture that is functional but not yet performing at the level Uganda’s development ambitions demand. Six reforms deserve priority.
- Close the tax gap. Moving from a 13.6 per cent tax-to-GDP ratio to 16 per cent is a fiscal necessity, not a target for negotiation. With 5.2 million registered taxpayers against an estimated potential base of 10 million, the room for expansion is substantial. Digital compliance tools, inter-agency data sharing between URA and other government bodies, and simplified filing for small enterprises would accelerate progress without increasing rates for those already in the net.
- Formalise the Output Delivery Ratio as a national KPI. This paper proposes the Output Delivery Ratio (ODR) as a core national PFM performance indicator defined as the percentage of planned budget outputs fully delivered in a given financial year. Uganda currently measures budget execution by financial absorption: how much of the budget was spent. But spending money is not the same as delivering results. An ODR, formally tracked and published alongside the Budget Performance Report, would shift the culture of government from compliance-based public financial management to performance-based public financial management. At 47 per cent, Uganda’s current ODR indicates significant room for improvement. Publishing this figure annually, disaggregated by programme and ministry, would create competitive pressure for better performance and give citizens and Parliament a direct accountability tool that financial absorption figures simply do not provide.
- Strengthen enforcement mechanisms. Strengthening enforcement mechanisms, including clearer accountability frameworks for accounting officers, would improve output delivery. Programme-based budgeting already provides the tools to make such accountability structural rather than discretionary. The institutional foundations for this shift are already established; what is needed is the consistent will to apply them.
- Accelerate arrears clearance. The three-year domestic arrears elimination strategy announced by MoFPED, with UGX 1.4 trillion allocated in FY2025/26, is a significant commitment. Its credibility depends on quarterly milestones published transparently and monitored by Parliament, alongside strict enforcement of commitment controls to prevent new arrears accumulating faster than old ones are settled.
- Extend IFMS to all 146 districts. The IFMS has demonstrated its value at the central government level. Extending it fully to all 146 districts, with real-time expenditure dashboards accessible to Parliament and the public, would bring the same transparency to local government spending where a significant share of service delivery occurs and where controls remain weakest.
- Contain debt servicing costs. The planned reduction in domestic borrowing for FY2026/27 is prudent and should be maintained. Beyond that, strict prioritisation is needed to ensure that new loans finance productive assets with demonstrable economic returns, not recurrent expenditure. The Ministry of Finance’s own projections indicate that debt service will remain above 20 per cent of revenues throughout the medium term; reducing it below that threshold within three fiscal years is a credible and necessary goal.
Call to Action: The 4th PFM Conference and Uganda’s Fiscal Future
Uganda’s Vision 2040 sets targets that are stark in their ambition: per capita income of USD 9,500 against a current USD 1,324; poverty below 5 per cent against a current 16.1 per cent; sustained GDP growth of 8.2 per cent or more annually. These targets are not achievable through incremental improvement. They require a step-change in how public money is managed, allocated, and accounted for.
The 4th PFM Conference, organised by ICPAU for 6–8 May 2026 in Entebbe, arrives at a critical juncture. A UGX 72 trillion budget is being executed. Seven million citizens remain in poverty. The debt stock exceeds half of GDP. The Output Delivery Ratio stands at 47 per cent meaning that for every two planned outputs, only one is fully delivered. These figures define both the scale of the challenge and the urgency of the response.
For policymakers, the fiscal choices made in the next two budget cycles will determine whether Uganda maintains debt sustainability or slides toward distress. For the private sector, arrears policy, tax administration, and budget execution directly shape the business environment and the cost of capital. For certified public accountants as auditors, advisors, and implementers, the stakes are professional as well as national. The UGX 22.393 billion in pension irregularities identified by the Auditor General, the planned IFMS extensions to 146 districts, and the growing complexity of programme-based reporting all require skilled accountants at the centre of the system, not at its periphery.
The foundation has been laid over two reform strategy cycles. The diagnostic tools, PEFA assessments, programme compliance certificates, and annual audit reports are already doing their job of identifying where the gaps lie. What remains is the political will and professional commitment to close them. The 4th PFM Conference is where that work continues. Plan to be there.
