finance 1 September 2026 Daily Monitor (Uganda)
Uganda Faces Shs246 Billion Revenue Shortfall in July, Straining Finances
Uganda's government experienced a significant revenue shortfall of Shs246.84 billion in July 2026, the first month of the financial year, due to weaker-than-expected domestic collections across major tax categories. This underperformance places considerable pressure on government finances and its efforts to reduce borrowing. Source: https://www.monitor.co.ug/uganda/business/finance/shs246b-revenue-shortfall-puts-pressure-on-govt-finances--5580468
The Ugandan government began the 2026/27 financial year with a substantial revenue gap, collecting Shs2.685 trillion against a target of Shs2.932 trillion in July. This deficit of Shs246.84 billion highlights ongoing challenges in domestic revenue mobilization.
The Finance Ministry reported underperformance across key tax sectors, including taxes on international trade, goods and services, and incomes. International trade taxes missed their target by Shs60.05 billion, largely due to lower-than-expected customs duties, particularly on imports like petroleum products.
Taxes on goods and services saw the largest shortfall, with collections Shs115.36 billion below target. This was primarily attributed to lower Value Added Tax (VAT) and excise duty collections, influenced by the economic activity mix, transaction levels, and the continued prevalence of illicit excisable products.
Income tax collections also fell short by Shs28.15 billion, with corporate income tax and rental income tax being significant contributors to this gap. Non-tax revenue, including fees like driver’s licenses and passports, also underperformed, missing its target by Shs43.04 billion.
Compounding the revenue challenges, government recurrent expenditure exceeded its programmed level by Shs148.61 billion, mainly driven by higher-than-anticipated grants to local governments and tertiary institutions. While spending on employee compensation and goods and services remained below target, increased grants significantly widened the overall fiscal deficit.
Despite these fiscal pressures, the government raised Shs3.968 trillion through treasury bills and bonds in July, primarily to refinance maturing debt. Interestingly, interest rates on government securities and bank lending rates generally eased during the month, potentially offering some relief to borrowers amidst the fiscal strain.