Uganda's net central government revenue increased by 34.9 per cent to 11.46 trillion shillings in the fourth quarter of the 2025/2026 financial year, according to the Central Government Finance Statistics Bulletin for Q4 2025/26. The government collected 11.46 trillion shillings in the quarter, compared to 8.5 trillion shillings in the third quarter, representing an additional 2.96 trillion shillings within three months. The bulletin showed that tax revenue accounted for 93 per cent of total collections, while non-tax revenue made up 7 per cent.
Taxes on income, profits and capital gains formed the largest revenue category, representing 39.7 per cent of total government revenue in the quarter. This reflects the importance of income-generating economic activities, employment, business profitability and corporate earnings in supporting government finances. Non-tax revenue sources included grants contributing 3 per cent and other revenues contributing 4 per cent of collections. The figures indicate that government revenue depends heavily on taxation, making improvements in tax compliance, expansion of the tax base and formalisation of businesses critical for sustaining revenue growth.
However, government spending outpaced revenue growth during the same period. Total central government spending, including transfers to local governments and donor disbursements, rose to 16.7 trillion shillings in Q4 2025/26 from 11.64 trillion shillings in the previous quarter, a 43.5 per cent increase. This meant the difference between total expenditure and net revenue reached approximately 5.23 trillion shillings in the fourth quarter. Central government recurrent expenditure, excluding transfers to local governments, increased by 10.9 per cent to 8.92 trillion shillings.
General public services accounted for the largest share of recurrent expenditure at 42.5 per cent, with public debt transactions representing 18.7 per cent of total recurrent expenditure. Economic affairs received 12.8 per cent of recurrent spending, followed by defence at 9.6 per cent. On development expenditure, economic affairs received the largest allocation at 39.2 per cent of total development spending, reflecting government priorities in economic activities and infrastructure-related sectors. Donor disbursements were concentrated in general public services at 51.3 per cent and economic affairs at 35.3 per cent.
The faster growth in expenditure compared to revenue collections means increased spending pressures remain significant for government finances. Although domestic revenue mobilisation improved, the fiscal gap widened, highlighting the challenge of balancing increased spending on public services and infrastructure with sustainable financing to avoid excessive borrowing and rising public debt costs. The substantial share of expenditure directed towards debt servicing could limit resources available for other priority sectors if debt obligations continue to consume a growing proportion of the national budget.
For savers, borrowers and businesses in Uganda, faster revenue growth can strengthen the government's capacity to finance development programmes without depending excessively on borrowing, but the wider gap between spending and income suggests continued fiscal pressures that could affect interest rates and credit availability.