Domestic revenue mobilisation plays a critical role in Uganda’s economic growth strategy. As the country prepares its 2025/2026 fiscal plan, the government is focusing heavily on generating internal revenue to reduce foreign dependency and strengthen financial independence.
For the financial year 2025/2026, Uganda has proposed a national budget of Shs72.137 trillion. A large part of this will come from domestically generated revenue. This strategy supports the country’s development goals and boosts its ability to withstand economic and climate shocks.
Parliament approved the second Charter for Fiscal Responsibility (CFR) covering FY 2021/2022 to FY 2025/2026. The charter outlines Uganda’s fiscal goals, which support macroeconomic stability and socio-economic transformation. Within these goals, domestic revenue mobilisation is essential to achieving sustainable growth.
The Ministry of Finance, Planning and Economic Development (MFPED) has detailed how Uganda plans to fund the 2025/26 budget. Domestic revenue is expected to contribute Shs37.227 trillion. This is the highest target since Uganda’s independence in 1962. It reflects a strong push to expand the tax base and improve collection systems.
Moreover, Uganda will receive Shs2.084 trillion in grants and loans from development partners. Domestic borrowing is expected to add Shs11.381 trillion. However, this raises concerns about private sector financing. Banks often prefer to lend to the government because it’s considered low-risk, which limits credit for businesses.
To manage existing obligations, the government will conduct domestic debt refinancing of Shs10.027 trillion. This move aims to lower refinancing risks and cut future borrowing costs. Additionally, project support from grants and loans will amount to Shs11.327 trillion, targeting development initiatives through ministries and agencies.
The government plans to raise the targeted Shs37.227 trillion through tax and non-tax revenues. Major sources include income tax, corporate tax, VAT, and customs duties. Non-tax revenue will come from service fees, licenses, and penalties. This mix reflects a comprehensive effort to achieve the domestic revenue mobilisation goal.
Importantly, this strategy supports national goals under Vision 2040. Uganda aims to transform into a modern, prosperous country. More internal revenue means more funding for infrastructure, healthcare, and education without relying on unpredictable external sources.
While borrowing still plays a role, the focus is shifting. The government now aims to borrow smartly and reduce overreliance on loans. Still, heavy domestic borrowing can limit access to credit for the private sector. This could affect economic growth if not managed carefully.
Therefore, tax reforms and improved collection systems are crucial. The Uganda Revenue Authority is digitizing systems, increasing compliance, and enhancing transparency. These efforts will ensure fair taxation while expanding the revenue base.
Sustained domestic revenue mobilisation will help Uganda handle future challenges. With more internal resources, the government can better address emergencies, climate change, and rising development demands. It also helps reduce dependence on external aid, which can fluctuate due to global economic changes.
Uganda’s development partners will continue supporting critical sectors. However, the government’s move toward funding its own priorities signals financial maturity. A balanced approach—using both internal and external resources—ensures a more stable economy.
In summary, the 2025/2026 fiscal year marks a turning point for Uganda. By setting its highest-ever revenue target, the country is embracing domestic revenue mobilisation as a foundation for sustainable development and economic independence.
Read: Uganda’s 2025/26 Budget Grows 25% to 71.9 Trillion Shillings
