Uganda’s February 2026 revenue falls short by Shs 180bln amid weak tax performance
KAMPALA, March 26, 2026 — Uganda’s domestic revenue collections in February 2026 fell short of target by Shs 180.08bln, reflecting weaker-than-expected performance across key tax categories, according to the latest Performance of the Economy Monthly Report.
The report indicates that total domestic revenue amounted to Shs 2.57trn against a target of Shs 2.75trn. The shortfall was largely attributed to underperformance in indirect domestic taxes and international trade taxes, despite a modest surplus in direct domestic taxes.
Indirect domestic taxes registered a deficit of Shs 15.33bln against a target of Shs 742.19bln. This was mainly due to lower-than-expected collections from Value Added Tax [VAT], particularly in wholesale and retail trade, hotels and restaurants, as well as mining and quarrying. Collections from excise duties — including those on phone talk time, soft drinks and levies on cash withdrawals — also fell below projections.
Similarly, international trade taxes underperformed, recording a shortfall of Shs 82.79bln against a target of Shs 1.05trn. The decline was largely driven by weaker collections from import duty and VAT on imports.
In contrast, direct domestic taxes exceeded expectations, posting a surplus of Shs 14.40bln. Collections reached Shs 789.87bln against a target of Shs 775.47bln, supported by strong performance in Pay As You Earn [PAYE], corporate tax and taxes on treasury bills.
Non-tax revenue disappoints
Non-tax revenue collections also fell significantly short, amounting to Shs 127.96bln compared to a target of Shs 250.26bln, a deficit of Shs 122.30bln. The underperformance was attributed to lower-than-anticipated collections from administrative fees.
Sharp decline in grants
Government grants declined sharply during the month, with total receipts of Shs 41.55bln against a target of Shs 130.11bln. This represents a performance rate of just 31.9 per cent and a shortfall of Shs 88.55bln.
The decline was mainly due to delays in the disbursement of budget support, as well as lower-than-projected inflows of project grants.
Expenditure slightly below plan
Total government expenditure in February stood at Shs 3.39trn, marginally below the planned Shs 3.42trn. However, spending in certain categories exceeded projections.
Meanwhile, grants from central government to other levels of government reached Shs 1.11trn, surpassing the planned Shs 978.80bln. The increase was largely driven by additional funding to Uganda National Airlines, as well as capitalisation of institutions and financing schemes.
Interest payments also exceeded expectations, rising to Shs 1.03trn compared to a planned Shs 979.68bln. According to the report, this was mainly due to higher domestic interest payments, which exceeded projections by Shs 75.24bln.
“This was due to the front-loading of domestic borrowing to align with the timing of government expenditures,” the report notes.
In contrast, expenditure on compensation of employees and purchases of goods and services fell below projections, registering shortfalls of Shs 14.28bln and Shs 64.97bln, respectively. The lower spending on wages was attributed to reduced outlays on allowances and employer social security contributions.
Meanwhile, government spending on non-financial assets totalled Shs 444.69bln, slightly above the planned Shs 443.06bln. This was mainly driven by investment in facilities and equipment, as well as road rehabilitation projects.
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