(Ecofin Agency) - – Government outlines major investments in roads, health, education, and agriculture

– Oil sector, renewable energy, and mining get key funding to drive economic transformation

– External funding remains tight after World Bank freeze linked to anti-LGBTQ law

Uganda has rolled out an $11.1 billion (40,700 billion shillings) budget plan for FY2025-26. The proposal, officially presented to Parliament on March 27, by State Minister for Finance Henry Musasizi, puts infrastructure, defense, energy, health, education, and agriculture at the heart of the country’s development push.

Infrastructure tops the spending list, with 5.7 trillion shillings set aside to finish road projects, maintain transport networks, and improve safety and quality standards. Defense comes next, with an allocation of 3.7 trillion shillings. That money will cover salaries, military operations, and investments in new equipment and infrastructure upgrades.

Energy is also a priority, with 1.6 trillion shillings going into oil refinery development, renewable energy, and mineral exploration. The government hopes this will boost energy independence and support Uganda’s broader economic transformation.

Uganda’s economy is currently growing at a steady pace. In 2024, GDP rose by 6%, driven by investments in the oil sector, favorable weather for agriculture, and financial inclusion efforts like the Parish Development Model. Inflation stayed low, averaging 3.2% over the 2023/24 fiscal year, thanks to stable food prices and tight monetary policy.

But not everything is smooth sailing. Uganda has been struggling to access external financing since the World Bank froze new funding in response to a controversial anti-LGBTQ law passed in May 2023. The law, considered one of the harshest in the world, is now under review by Uganda’s Supreme Court after challenges from human rights organizations.

In the meantime, Uganda has opened talks with the International Monetary Fund for a new loan program. The country is still set to receive one last disbursement under the current three-year Extended Credit Facility agreement signed in 2021.

Looking ahead, economic prospects remain strong. The World Bank projects Uganda’s economy to grow by 6.2% in 2025, with a sharp jump to 10.8% expected in 2026 as oil production kicks off. Growth is then expected to settle around 6% once the oil sector matures. The rebound in tourism is also expected to support this positive outlook.

Charlène N’dimon