The Government of Uganda has significantly increased its allocation for the settlement of domestic arrears, providing UGX 1.4 trillion in the proposed 2025/2026 national budget, up from UGX 200 billion in the previous financial year.
The provision was highlighted in the Budget Committee report currently being received by Parliament, as part of deliberations on the proposed annual budget for the new fiscal year.
According to the Auditor General, Uganda’s domestic arrears have ballooned to UGX 13.814 trillion by the end of FY2023/24, marking a 31.54% increase from UGX 10.502 trillion recorded in FY2022/23.
The surge is attributed to inadequate budgeting, cash flow constraints, and growing government expenditure demands.
The Budget Committee welcomed the increased allocation, noting that it demonstrates a commitment to addressing the country’s growing arrears burden.
However, the Committee cautioned that the UGX 1.4 trillion provision will only partially reduce the outstanding arrears, lowering the stock to UGX 3.854 trillion.
The Committee clarified that of the UGX 13.81 trillion in arrears, UGX 8.313 trillion was for Bank of Uganda redemptions already covered in the FY2024/25 budget.
The remaining UGX 5.254 trillion relates to unpaid obligations for goods and services, pension and gratuity, court awards, rent and utilities, and contributions to international organizations.
Despite the increased budgetary commitment, the Committee called for stricter fiscal discipline.
“The Committee urges government to adhere to the Commitment Control System and sanction Accounting Officers who perpetually commit Government expenditure without resources and outside the approved budget,” the report
reads.
With domestic arrears posing a threat to service delivery and private sector cash flow, the Committee’s recommendations point to a need for more prudent public financial management to prevent future accumulation.
