Uganda

Strong growth, boosted by oil investments

In 2026, economic growth is expected to accelerate further, stimulated by significant foreign investment focused on developing the oil industry. The Tilenga and Kingfisher fields, located in the west of the country around Lake Albert and operated by Total Energies and China National Offshore Oil Corporation (CNOOC) respectively, are expected to come on stream in the second half of 2026. However, further delays in the start of production could occur. At the same time, related infrastructure work is continuing, notably the East African Crude Oil Pipeline (EACOP) project, estimated to cost USD 5 billion, which will transport Ugandan oil to the port of Tanga in Tanzania. Launched in 2023, the project was 64.5% completed sometime in July 2025, with commissioning scheduled for 2027. Thus, export revenues will only contribute to growth from that date. However, the EACOP may encounter difficulty in mobilising the second tranche of financing after obtaining a USD 1 billion syndicated loan in March 2025 from local and regional banks. In addition, the project faces strong international opposition due to environmental and human rights concerns. In September 2025, a French court ordered Total Energies to produce documents relating to the project's impacts, marking the first legal victory for NGOs in the matter. Furthermore, agriculture will remain an essential pillar of the economy (24% of GDP in 2024), with coffee leading the way. Coffee sales will continue to reap the benefit from high international prices despite an expected lull in 2026 due to very good harvests. With agriculture employing 70% of the working population, private consumption is expected to be robust. The gold sector will receive a boost from the Wagagai Mining Limited project (China), which will be inaugurated in August 2025 and is expected to increase refined gold production. The government will continue to develop services (53% of GDP) under the Fourth National Development Plan (PND IV), particularly in tourism, which will nevertheless face strong regional competition, particularly from Kenya and Tanzania, as well as education and health. In addition, the country will benefit from USD 2 billion in new financing from the World Bank to fund projects in various sectors.

Inflation is expected to accelerate again in 2026 on back of strong demand for capital goods needed for the development of the oil sector. However, it will remain below the 5% ceiling set by the central bank, as the decline in global energy prices will partially offset the rise in imported inflation. Global economic uncertainty and persistent inflationary pressures are likely to delay the central bank's next monetary easing until 2026. The key interest rate was set at 9.75% in October 2024.

Twin deficits weigh on public debt

The budget deficit is expected to narrow slightly during fiscal year 2026 (1 July 2025 to 30 June 2026) owing to improved mobilisation of public revenues, which will grow faster than expenditures due to strong economic growth. This will be based in particular on the rationalisation of tax exemptions, the closing of tax loopholes, and the fight against corruption within the tax authority (URA) and smuggling at border posts. Oil will not begin to contribute significantly to tax revenues until 2027. However, debt interest payments will continue to weigh heavily, offsetting the positive effect of an improvement in the primary deficit. The public deficit will be financed mainly by external debt, which will remain largely concessional. The stock of public debt (60% of which is external) increased by 26% in fiscal year 2025, mainly due to increased domestic borrowing. A renewed engagement with the International Monetary Fund could amplify this trend. Nevertheless, strong growth will mitigate the increase in the debt burden.

In 2025, the current account deficit is expected to narrow. The increase in imports of capital goods and technical services, which are necessary for the expansion of the oil industry, will be partly offset by lower global oil prices. At the same time, durably high gold and coffee prices will support external revenues. The outlook for the current account balance in 2026 is expected to remain unchanged, as the country will not yet be receiving oil revenues. The external revenue deficit will persist, as remittances from expatriates will remain insufficient to offset interest payments on external debt and dividend repatriations by foreign investors. This current account deficit is largely financed by long-term debt (mainly concessional) and foreign direct investment (FDI). Over the next three years, Uganda will benefit from the resumption of financial support from the World Bank, which lifted the suspension imposed in August 2023 after the government passed anti-LGBT legislation. In addition, the authorities are currently negotiating a new programme with the IMF under the Extended Credit Facility, following the early expiration in 2024 of a previous agreement.

Persistent security threats on the Congolese and South Sudanese borders

In power since 1986, President Yoweri Museveni and his National Resistance Movement (NRM) party, which holds a majority in the National Assembly (337 seats out of 529), dominate the political landscape. Army support and a weak and fragmented opposition should enable President Museveni to win the next elections scheduled for 12 January 2026. However, the NRM's ongoing failure to fight corruption and improve public services will continue to fuel social frustration. Anti-government protests are quickly suppressed by security forces, thereby preventing them from developing into a nationwide movement.

In 2026, the Ugandan (UPDF) and Congolese armed forces will continue their collaboration under Operation Shujaa, which was launched in 2021 to combat the Allied Democratic Forces (ADF), a group of Islamist rebels of Ugandan origin who have taken refuge in the northeast of the Democratic Republic of Congo and who are active in Uganda. In 2025, Uganda deployed at least 3,000 additional soldiers, doubling its presence in the DRC. However, a 2024 UN report attests to Uganda's tacit support for the M23 rebel movement, which is active in the same region and is supported by Rwanda. Furthermore, political instability in South Sudan poses a growing risk in the north of the country. Since March 2025, Uganda has maintained troops in Juba, the South Sudanese capital, to support President Salva Kiir against supporters of disgraced Vice President Riek Machar. The presence of troops has not prevented the two countries from engaging in border disputes, which have led to skirmishes along the border. The deployment is also a response to fears of a massive influx of refugees: the United Nations estimates that 50,000 South Sudanese fled to Uganda in 2025.

Last updated:October 2025