Uganda’s economy is projected to grow by 7.6% in the 2026/2027 financial year despite mounting inflationary pressures and the recent depreciation of the Uganda Shilling against the US dollar.
This was revealed by the Deputy Permanent Secretary at the Ministry of Finance, Planning and Economic Development, Patrick Ocailap, during the release of the second-quarter expenditure for the 2026/2027 financial year.
Ocailap attributed the rise in inflation to increasing transport and energy costs, driven by sustained increases in international oil prices amid ongoing geopolitical tensions in the Middle East.
Inflation rose from 4% in July to 4.6% in September 2026. However, Ocailap noted that it remains within the government’s medium-term policy target of 5%.
Meanwhile, the Uganda Shilling has depreciated by approximately 6% against the US dollar, with the exchange rate exceeding Shs4,000 per dollar. The depreciation has been attributed to high global oil prices and increased demand for foreign currency from the energy, manufacturing and telecommunications sectors.
Ocailap, however, cautioned against interpreting the weakening shilling as a sign of a shrinking economy. He said the exchange rate should be assessed within the broader context of economic performance, particularly the rising demand for foreign exchange relative to its supply in the market.
On government expenditure, Ocailap announced the release of Shs21.82 trillion for the second quarter, covering October, November and December 2026.
He said the funds were allocated in line with the government’s annual and quarterly work plans, projected domestic revenue collections and available cash resources, among other considerations.
Of the total amount released, Shs10.75 trillion was allocated to debt and treasury operations, while Shs2.42 trillion was earmarked for wages and salaries. A further Shs376.6 billion was allocated to pensions and gratuities, among other government expenditure requirements.
The quarterly release is intended to facilitate the implementation of government programmes and activities during the second quarter of the 2026/2027 financial year.
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