Uganda’s economy grew by 6.8 percent in the nine months to March 2025 on the back of strong performance in agriculture, manufacturing and construction, according to the latest Uganda Economic Update released by the World Bank on Wednesday.
This was a commendable 0.7 percentage points increase from 6.1 percent during the corresponding period the previous year.
The report projects a positive medium-term outlook, with growth acceler¬ating to 10.4% in the 2026/27 financial year “as oil production begins before stabilising around six percent.”
Despite the upbeat growth and inflation remaining below the central bank’s five percent target, the report warned of mounting risks to long-term stability.
“Oil production timing remains uncertain including completion of large infrastruc¬ture, such as the crude oil export pipeline, needed to bring the product to market and generate revenues.”
In addition, public debt has climbed to nearly 53 percent of GDP while domestic revenue collection remained weak, with a tax-to-GDP ratio of just 14 percent below the critical 15 percent benchmark for sustainable development.
“Increased election-related spending and declining overseas aid make it urgent for Uganda to boost domestic revenues and curb unplanned expenditures,” said Francisca Ayodeji Akala, World Bank Country Manager.
“Increased spending this current election cycle, and with public debt-to-GDP reaching almost 53 percent, raises uncertainties and requires authorities to minimise unplanned expenditures and increase effectiveness in generating domestic revenues rather than cutting development spending,” World Bank country manager Francisca AyodejiAkala said.
“Moreover, considering recent cuts in Overseas Development Assistance, raising domestic rev¬enues has become even more critical, as only then can the government ensure sustained and adequate public spending on key social services, particularly health and education.”
The report urges reforms to broaden the tax base, improve equity and strengthen spending efficiency.
Recommendations include adjusting income tax brackets, tightening corporate exemptions and reducing wasteful public administration costs.
JN/APA