CSBAG pushes for greater budget discipline in post-budget review

June 18, 2025 in Business, Finance, Policy by Editor

Civil society urges government to rationalize borrowing, clear arrears, and deliver on investment promises

The Civil Society Budget Advocacy Group (CSBAG) has issued a strong call for fiscal prudence and transparency in Uganda’s UGX 72.4 trillion 2025/26 national budget, warning that rising public debt and persistent domestic arrears threaten to undermine economic growth and crowd out private sector investment.

During its post-budget dialogue held in Kampala on June 17, CSBAG Executive Director Julius Mukunda challenged the government to align budget execution with broader development goals. He emphasized that the 19.1pc interest rate—among the highest in the region—remains a key obstacle to private sector expansion.

“Fiscal discipline is essential. We need to reduce domestic borrowing and seek cheaper, better loans abroad,” Mukunda said, citing concerns that excessive domestic debt issuance is squeezing out local businesses from credit markets.

The 2025/26 budget, presented by Finance Minister Matia Kasaija on June 12, represents a marginal 0.3pc increase from the previous year. It will be primarily financed through domestic resources (UGX 58.96 trillion), with external support contributing UGX 13.54 trillion. However, nearly half of the budget—UGX 34.82 trillion (48pc)—will be sourced from both domestic and external borrowing, adding further pressure to the UGX 107 trillion public debt stock as of December 2024.

Mukunda argued that the budget’s reliance on borrowing, especially domestically, risks stifling Uganda’s economic dynamism.

“Domestic arrears and delayed project execution remain unresolved pain points,” he said. “They hurt suppliers, strain trust in public institutions, and delay service delivery.”

Speakers at the forum, themed “From Budget to Business: How Fiscal Reforms Can Unlock Trade and Investment Opportunities in Uganda”, agreed that while the budget articulates a strategic framework for growth, its effectiveness hinges on disciplined execution and transparency.

There was cautious optimism regarding allocations to Uganda’s extractives and infrastructure sectors. The government’s requirement that 84pc of Tier One oil and gas contracts—worth USD 2.25 billion—be awarded to Ugandan companies was seen as a step toward genuine local content development.

Humphrey Asiimwe, CEO of the Uganda Chamber of Energy and Minerals, praised the UGX 875.8 billion allocation to mineral-based industrial development, calling it “a crucial step in unlocking Uganda’s energy and mineral potential.”

“The private sector is ready to partner with government to ensure full realization of these initiatives,” Asiimwe said. “But timely execution is non-negotiable.”

The allocation targets critical areas such as mineral resource quantification, mining company capitalization, and construction of value-add infrastructure, including the East African Crude Oil Pipeline (EACOP) and the planned oil refinery.

Stakeholders also welcomed incentives aimed at building local industrial capacity—especially in mineral beneficiation, where Uganda is moving from raw material exports to refining and processing. Highlights include plans for 10 gold refineries, 4 cement plants, and a 60,000-barrel-per-day oil refinery.

Entrepreneurship is also being promoted through tax holidays for start-ups and the technical training of over 14,000 Ugandans in oil and gas skills, part of a wider national workforce development agenda.

Representing the Deputy Governor, Philip Andrew Wabulya, the Bank of Uganda’s Executive Director for Risk and Strategic Management, outlined the central bank’s role in anchoring budget stability. He reaffirmed the bank’s commitment to its Inflation Targeting Lite framework, noting its success in maintaining price stability.

Wabulya added that targeted financing tools—such as the Agriculture Credit Facility and the Small Business Recovery Fund—are critical for supporting rural economies and micro-enterprises, aligning monetary policy with fiscal priorities.

While the 2025/26 budget contains progressive allocations and a clear development vision, CSBAG and other civil society voices emphasised that credibility in execution remains Uganda’s biggest test.

With debt levels already elevated and economic vulnerabilities exposed by global shocks, stakeholders say that prudent financial management, enhanced transparency, and timely delivery of projects will determine whether this budget unlocks inclusive growth or deepens fiscal stress.

“We are not against borrowing,” Mukunda clarified. “But let us borrow smartly, spend efficiently, and remain accountable to the people we serve.”