Experts have urged Uganda to avoid taking loans for which they never prepared and planned, as this distorts growth and development.
This comes as the country embarks on what many have termed “ambitious”, a journey to grow the economy from the current 53 Billion to 500 Billion Dollars in the next 15 years.
This journey starts with the 2025/26 national budget and the fourth National Development Plan that takes effect on July 1, 2025.
However, experts and development partners are concerned about the way the country handles some critical issues, including budgeting, debt management and revenue mobilisation.
Daniel Lukwago, an economist consultant at the World Bank in Uganda says there is a lot of money with lenders available for lending, and that the lenders will always try to influence governments into taking loans, whether needed or not.
He was speaking at a “High-Level Policy Dialogue on the State of Uganda’s Economy” under the National Budget Month 2025/26, which reflected on fiscal challenges, debt, revenue, and inclusive growth.
According to Lukwago, unplanned borrowing is one of the reasons there are many non performing or stalled projects, while the absorption level of the loans is very low at just 37 percent.
He added that Uganda should start budgeting on the resources they have or are sure of getting.
The 2025/26 budget is about 72 Trillion Shillings, with the Uganda Revenue Authority tasked to collect 37 trillion. This, according to Lukwago, is what the government should be budgeting on, not what it expects to borrow since the loans are liabilities.
The pre-budget event was a dialogue between the government, the development partners and the civil society led by tax and trade rights group, SEATINI Uganda, to examine and offer recommendations about the planned tenfold growth of the economy.
SEATINI Uganda Executive Director, Jane Nalunga, downplayed the relevance of the ambition it if it didn’t offer hope for better livelihoods of the ordinary Uganda.
“When you say Uganda’s economy will grow by 7 percent, what does that mean to someone in Kasanda? Does it mean health facilities, schools, and roads are there?” she poses, adding, “Economic growth must translate into improving livelihoods—better access to social services like health and education. Otherwise, the numbers mean nothing.”
That notwithstanding, Nalunga questioned the reality of the plan amidst the many challenges, local and external, that are likely to affect progress.
“We are facing a great crisis where one crisis feeds into another – climate change, global trade wars, U.S/China tariffs – we must understand how to position ourselves in that context,” Nalunga questioned.
She also downplayed the influence or impact of borrowing on the planned growth prospects.
“Even if the World Bank is back, they are back with loans. How do we break this cycle of loans? A large part of our proposed budget is for debt servicing, and that is a challenge,” she concluded by citing the continued exportation of raw commodities, especially agricultural products and gold.
Aloysious Kittengo, Program Coordinator, SEATINI Uganda, also condemned policies that he claimed are now well thought out and end up either being contradictory or not tenable.
He gave the example of President Yoweri Museveni’s boasting about allowing investors to repatriate profits after paying taxes.
“But if those taxes are waived through incentives, and workers are casuals not on PAYE register, we lose both tax revenue and employment benefits. The current incentive regime must be reviewed,” Kittengo said.
The incentives and exemptions in the Income Tax Law, with many exemptions not subjected to cost-benefit analyses, like creation of decent jobs opportunities or using local raw materials, was also named problematic.
Kittengo also urged the government to ensure the public sees what the taxes do, so as to cure tax apathy and rebuild the morale.
On the budget, he also of the view that no initial research and planning are done to inform the budget, which reason the proposals are usually unachievable.
“We need well-researched projections. Civil society has submitted alternative tax proposals through the Tax Justice Alliance, but the government limits the time for input. They say our proposals lack research, yet space for engagement is narrow,” he asserted.
He said that even the increase from the initial 33 trillion to 37 trillion Shillings revenue collection projection should be explained.
“What informs these numbers?” he asked, adding, “If projections are not based on real data, we risk budgeting blindly. Reliable data is needed to align expected revenue with actual spending; otherwise government will resort to commercial loans.”
Parliament was blamed for not doing its oversight role well especially regarding directing the formulation and implementation of the budget.
But Sulaiman Kiggundu, the Director Parliamentary Budget Office, rejected blame against the MPs, saying that they do their work as provided for in the laws.
“We cannot continue the blame game, parliament has done its role, the responsibility now lies with every citizen—to track, to question, to demand accountability, otherwise, no one ends up being responsible,” he said.
He said that Parliament’s role is to ensure that the strategies of the government are catered for in the appropriations.
When people ask where the money went, the budget is very clear.
“There are 18 programs—human capital, transport, etc. Now the citizens must demand: Where did it go? Who is responsible? The budget must be unpacked,” Kiggundu said, adding, “Under Article 164, Parliament shall monitor all public funds. We do our work. But after findings, enforcement lies with others—police, judiciary, and other government bodies.”
He said the House appropriates the budget, but execution lies with government agencies, and Parliament presses the agencies to ensure the programmes are followed and well-implemented.
“Parliament asks why projects are delayed. The Auditor General and committees do their part,” Kiggundu said.
According to him, Parliament has never failed to approve a budget request in time.
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