KAMPALA, September 21, 2026 — The Government of Uganda recorded a fiscal deficit of Shs 708.85 billion in August 2026, nearly three times the Shs 257.62bln programmed for the month, as revenue collections fell short while expenditure exceeded the planned level.
The latest Performance of the Economy Monthly Report by the Ministry of Finance, Planning and Economic Development shows that the August deficit was driven by a combination of lower-than-target revenue collections and higher-than-programmed government spending.
According to the report, “the higher-than-planned deficit was primarily caused by lower revenue collections and higher government expenditure” during the month.
Government collected Shs 2.90 trillion in total revenue, including grants, against a monthly target of Shs 3.30trn, representing an 87.8 percent performance rate and a shortfall of Shs 403.29bln.
The report notes that “domestic revenue collections, including local government revenue, amounted to Shs 2.87 trillion,” falling Shs 365.68 billion below the Shs 3.24 trillion target.
Tax collections accounted for most of the domestic revenue shortfall, with collections of Shs 2.66trn against a target of Shs 2.98trn. This represented a shortfall of Shs 312.64bln.
Indirect taxes recorded the largest gap at Shs 170.39bln, largely because of weaker-than-expected excise duty collections from key manufacturing sectors, including beer, cooking oil and cement.
The report attributes the underperformance in excise duty collections to “lower-than-programmed collections from beer, cooking oil and cement,” among other factors.
Value Added Tax collections also fell short by Shs 136.01bln, with the report attributing the underperformance mainly to lower collections from electricity, cement, soft drinks and the hospitality sector.
Direct taxes missed their target by Shs 108.43bln, while international trade taxes recorded a Shs 49.36bln shortfall.
At the same time, government expenditure reached Shs 3.32trn against a programmed Shs 3trn, exceeding the target by Shs 313.86bln.
The largest expenditure overruns were recorded under grants, social benefits and other expenses.
Grants expenditure amounted to Shs 1.24trn, exceeding the programmed Shs 1.02trn by Shs 214.99bln, while social benefits reached Shs 200.52 billion against a target of Shs 124.03bln.
The ministry said the spending pressures, combined with weak revenue performance, widened the fiscal deficit during the month.
Despite the fiscal pressure, other indicators in the report point to continued expansion in economic activity.
The Purchasing Managers’ Index stood at 55.0 in August, remaining above the 50-point threshold that signals improvement in business conditions, while the Business Tendency Index rose to 59.6 from 56.1 in July.
The report also shows that Uganda’s merchandise trade deficit widened sharply year-on-year, reaching US$ 210.03 million in July 2026, compared with US$ 11.18mln in July 2025, as the increase in imports outpaced export growth.
The Ministry’s report is based on preliminary fiscal data for August 2026.
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