August 2026
Performance of the Economy Report
Ministry of Finance, Planning and Economic Development
2026-09-22
List of Acronyms
| Acronym | Expansion | |
|---|---|---|
| BIF | Burundian Franc | |
| BOU | Bank of Uganda | |
| BTI | Business Tendency Index | |
| CBR | Central Bank Rate | |
| CIEA | Composite Index of Economic Activity | |
| D.R.C | Democratic Republic of Congo | |
| EAC | East African Community | |
| EFU | Energy, Fuel and Utilities | |
| FOB | Free on Board | |
| FX | Foreign Exchange | |
| FY | Financial Year | |
| GBP | British Pound Sterling | |
| ICBT | Informal Cross Border Trade | |
| KSh | Kenyan Shilling | |
| MDAs | Ministries, Departments and Agencies | |
| MOFPED | Ministry of Finance, Planning and Economic Development | |
| PAYE | Pay as You Earn | |
| PMI | Purchasing Managers’ Index | |
| PSC | Private Sector Credit | |
| RWF | Rwandan Franc | |
| T-Bills | Treasury Bills | |
| T-Bonds | Treasury Bonds | |
| TZS | Tanzanian Shilling | |
| UBOS | Uganda Bureau of Statistics | |
| UNOC | Uganda National Oil Company | |
| UShs / Shs | Ugandan Shilling | |
| US$ / USD | United States Dollar | |
| VAT | Value Added Tax | |
| YTM | Yield to Maturity |
Summary1
Real Sector
Economic activity and business perceptions continued to improve, as reflected by the High-Frequency Indicators of Economic Activity, which remained above their respective thresholds. The Purchasing Managers’ Index (PMI) stood at 55.0, while the Business Tendency Index (BTI) increased to 59.6 from 56.1 in the previous month. The performance of these indicators points to an improvement in private sector business conditions and continued optimism regarding economic activity in the coming months.
The Composite Index of Economic Activity (CIEA) stood at 192.1 in July 2026, a slight moderation from 192.9 recorded in June 2026. However, compared to 180.6 in July 2025, the index increased by 6.4 percent, indicating continued expansion in economic activity.
Annual headline inflation increased marginally from 4.0 percent in July 2026 to 4.1 percent in August 2026, mainly because of higher prices for selected food crops and core goods. On the other hand, Energy, Fuel and Utilities inflation slightly eased from 14.9 percent to 14.3 percent. The increase in headline inflation mainly reflected higher prices for staple foods and fruits, including Irish potatoes, fresh beans, cowpeas and mangoes, as well as higher prices for goods under the core inflation basket, particularly rice and dried fish.
Financial Sector
The Ugandan Shilling depreciated by 0.7 percent against the US dollar in August 2026, from an average of Shs 3,704.51 per US dollar in July to Shs 3,730.25 per US dollar, as increased foreign-exchange demand from the energy and manufacturing sectors outweighed inflows from commodity exports, non-governmental organisations and remittances.
Commercial bank lending rates increased in July 2026. The weighted average lending rate on Shilling-denominated credit increased from 16.93 percent in June to 17.32 percent in July. The weighted average lending rate on foreign currency denominated credit increased from 6.93 percent in June to 7.76 percent, partly on account of volatility in foreign currency deposits.
In the securities market, Government raised Shs 2,628.13 billion through one Treasury-Bill auction and two Treasury-Bond auctions in August 2026. Of this amount, Shs 2,027.72 billion refinanced maturing securities and Shs 600.41 billion financed other budget items. Yields generally declined across all treasury instruments, supported by strong market demand for Government securities.
The stock of outstanding Private Sector Credit increased by 1.2 percent to Shs 28,088.92 billion in July 2026, and was 18.1 percent higher than in July 2025. The growth in credit reflects sustained demand and supply of credit, occasioned by continued expansion in economic activity.
External Sector2
Year-on-year, Uganda’s merchandise exports increased by 10.1 percent, rising from USD 1,274.28 million in July 2025 to USD 1,402.56 million in July 2026, representing an increase of USD 128.28 million. The growth in export earnings was primarily driven by higher receipts from gold, maize, flowers, oil re-exports, beer, cocoa beans, cement, electricity, among others.
The merchandise import bill increased by 25.4 percent, rising from USD 1,285.45 million in July 2025 to USD 1,612.58 million in July 2026. This increase was primarily attributed to an increase in formal private sector imports, which more than offset the decrease in Government project related imports.
Uganda’s merchandise trade deficit with the rest of the world widened on a year-on-year basis from USD 11.18 million in July 2025 to USD 210.03 million in July 2026. This expansion was primarily driven by deteriorating trade deficits with Asia and the East African Community (EAC).
Fiscal Sector3
Government operations in August 2026 resulted in a fiscal deficit (net borrowing) of Shs 708.85 billion, significantly higher than the planned deficit of Shs 257.62 billion.
Total revenue (comprising domestic revenue and grants) amounted to Shs 2,895.82 billion, representing an 87.8 percent performance rate against the monthly target of Shs 3,299.10 billion. This resulted in a total shortfall of Shs 403.29 billion driven primarily by underperformance in domestic revenue collections and lower than targeted grant receipts.
Total Government expenses amounted to Shs 3,317.45 billion, exceeding the programmed target of Shs 3,003.58 billion by Shs 313.86 billion, occasioned by higher grants expenditure, social benefits, and other expenses.
Annual headline inflation increased across the rest of the EAC Partner States (save for Burundi) in August 2026. The highest rate was recorded in Rwanda (15.9 percent), followed by Kenya (6.6 percent), Tanzania (4.3 percent) and Uganda (4.1 percent). Burundi’s headline inflation declined to 8.4 percent in August 2026, from 8.7 percent registered in July 2026.
Currencies across the East African Community (EAC) depreciated against the US Dollar in August 2026. The Ugandan Shilling, Kenyan Shilling, Tanzanian Shilling, Rwandan Franc and Burundian Franc depreciated by 0.7 percent, 0.1 percent, 0.3 percent, 0.2 percent and 0.2 percent, respectively.
In July 2026, Uganda traded at a deficit worth USD 436.68 million with the EAC partner states, a deterioration when compared with the trade deficit of USD 54.49 million recorded in July 2025. Trade deficits were recorded with Kenya, Burundi, and Tanzania while trade surpluses were registered with the Democratic Republic of Congo, Rwanda and South Sudan.
1 Real Sector Developments
1.1 Inflation
Annual headline inflation increased marginally from 4.0 percent in July to 4.1 percent in August 2026. The increase mainly reflected higher prices for staple foods and fruits, including Irish potatoes, fresh beans, cowpeas and mangoes, as well as higher prices for goods under the core inflation basket, particularly rice and dried fish.
In contrast, Annual Energy, Fuel and Utilities Inflation(EFU) eased in August 2026, declining to 14.3 percent from 14.9 percent in July 2026. The moderation was mainly on account of a slower increase in the prices of some fuel items, which partly offset the rise in food and core goods inflation.
Annual core inflation increased marginally to 3.5 percent in August 2026 from 3.4 percent in July 2026. The increase was largely driven by higher prices of selected consumer goods. Price increases were registered for rice, wheat-based products (bread, chapati & pancakes), cassava flour, chicken kroiler, dried kapenta (mukene), smoked nile perch, smoked tilapia, salt, ginger powder and domestically bottled beer, among others. The increase in the price for rice, was partly attributed to restrictions on the importation of rice with permits limited to about 25 entities only. This resulted in rice trucks being held up at the Mutukula border, reducing the supply of rice in local markets, leading to higher prices.
In contrast, services inflation declined during the month due to slower price increases of international airfares, hairdressing services, and transport related fares for short, medium and long distances among others.
Similarly, Annual food crop and related items inflation rose to 2.1 percent in August 2026, from 1.6 percent in July 2026. The increase was partly explained by reduced food supply, dry conditions in some parts of the country and relatively high transportation costs. Consequently, prices of items such as fresh beans, green cabbage, pumpkins, Irish potatoes, fresh okra, cowpeas, pineapples, mangoes, and red onions increased further in August 2026 compared to the previous month. However, prices of other food items such as matooke, sweet potatoes, oranges and papaya declined during the month, partly moderating the overall increase in food inflation.
Annual Energy, Fuel and Utilities inflation (EFU) slowed down in August 2026, reversing the upward trend observed in recent months. Annual EFU inflation declined to 14.3 percent in August 2026 from 14.9 percent in July 2026, mainly on account of slower price increases for liquid fuels (petrol and kerosene) and solid fuels (charcoal). Annual inflation for petrol, kerosene and charcoal stood at 28.5 percent, 31.2 percent and 2.1 percent compared to 29.0 percent, 31.6 percent and 4.5 percent in the year ending July 2026, respectively.
However, pump prices remained high, with diesel and petrol averaging Shs 6,647 per litre and Shs 6,529 per litre in August 2026, compared to Shs 4,733 per litre and Shs 5,099 per litre in August 2025, respectively. The persistently high pump prices are primarily attributed to geopolitical tensions that continue to disrupt global fuel supply chains. The continued elevated pump prices also reflected a lag in the pass-through of lower international fuel prices (relative to the April peak), as some suppliers were still holding stocks procured at higher prices. These prices have affected both the cost of transport and cost of operation for businesses.
1.2 Economic Activity
Overall, the indicators of economic activity point to sustained economic expansion, supported by strong private-sector demand, employment growth and improved business confidence.
1.2.1 Purchasing Managers’ Index (PMI)6
The Purchasing Managers’ Index stood at 55.0 in August 2026, signalled a further improvement in private-sector business conditions for the nineteenth consecutive month. This was a moderate growth compared to the previous month, when the PMI stood at 55.5. The expansion was supported by stronger customer demand and new client acquisitions, which increased new orders and output across all monitored sectors. Firms reported an increase in employment, expanded purchasing activity and accumulated inventories to meet demand, although backlogs increased for the third consecutive month, indicating some capacity pressures. Meanwhile, higher utility, raw-material and wage costs raised operating expenses, prompting most firms to increase selling prices. Nevertheless, businesses remained optimistic about the year ahead, supported by expectations of stronger demand.
1.2.2 Composite Index of Economic Activity (CIEA)7
The Composite Index of Economic Activity (CIEA) stood at 192.1 in July 2026, down slighty from 192.9 recorded in June 2026. The monthly decline reflected reduced activity in indicators of private investment, private consumption and imports. Nevertheless, the index was 6.4 percent higher than its July 2025 level of 180.6, indicating continued economic expansion despite the marginal monthly moderation.
1.2.3 Business Perceptions
The Business Tendency Index (BTI), which tracks perceptions about doing business in Uganda, rose to 59.6 in August 2026 from 56.1 in July 2026, indicating stronger optimism about business conditions by private sector players. The improvement was mainly supported by better performance of the current business situation indicator, which rose to 57.1 from 52.5, alongside stronger demand for services and higher orders placed with suppliers. Optimism was strongest in the financial and other services sectors, whose indices increased to 80.9 and 64.7, respectively. Wholesale trade and manufacturing also remained positive, while agriculture moderated slightly but stayed above the 50-point threshold. Construction was the only sector reporting pessimistic sentiments, with its index declining to 48.0, mainly attributable to reduced activity because of rising input costs. Despite the overall improvement, sentiments on access to credit remained below 50, reflecting high cost of credit.
2 Financial Sector Developments
2.1 Exchange Rate Movements
The Ugandan Shilling depreciated against the US dollar in August 2026. On average, it weakened by 0.7 percent, from Shs 3,704.51 per US dollar in July to Shs 3,730.25 in August. The depreciation was largely driven by increased demand for foreign currency from the energy and manufacturing sectors. Petroleum companies increased their demand for US dollars to finance fuel imports. In addition, the demand for foreign currency from manufacturers and other businesses to import raw materials, machinery and intermediate goods exerted pressure on the US Dollar during the month. Although inflows from commodity exporters, NGOs and remittances provided some support, they were insufficient to offset the increased demand for US dollars.
The Ugandan Shilling also depreciated against the British pound sterling and the euro during the month, weakening by an average of 1.9 percent and 2.2 percent, respectively.
2.2 Interest Rate Movements
The Monetary Policy Committee (MPC) maintained the Central Bank Rate (CBR) at 9.75 percent in August 2026. The Committee considered the rate sufficient to preserve price stability, while continuing to monitor global developments and their implications for the inflation outlook.
2.2.1 Lending Rates8
The weighted average lending rate on Shilling-denominated credit increased slightly to 17.32 percent in July 2026 from 16.93 percent in June 2026. Despite the increase, lending rates have been on a downward trend for three consecutive months prior to July, indicating an overall easing in borrowing costs in recent months. This trend was supported by improved economic conditions and a decline in non-performing loans.
The weighted average lending rate on foreign currency-denominated credit increased to 7.76 percent in July 2026 from 6.93 percent in June 2026, partly on account of volatility in foreign currency deposits.
On an annual basis, lending rates remained lower for both Shilling and foreign currency denominated credit. Lending rates declined from 19.65 percent and 8.35 percent in July 2025 to 17.32 percent and 7.76 percent in July 2026, respectively. The year-on-year decline in lending rates indicates an improvement in borrowing conditions, with lower financing costs expected to support private sector growth and in turn support economic activity.
2.3 Government Securities
During the month of August 2026, Government raised Shs 2,628.13 billion through three auctions (1 T-Bill and 2 T-Bond) of treasury securities on the domestic primary market. A total of Shs 346.77 billion was raised from Treasury Bills while Shs 2,281.36 billion was raised from Treasury Bonds. Of the total amount raised, Shs 2,027.72 billion was used for refinancing maturing securities while the remaining Shs 600.41 billion was allocated towards financing other items in the budget.
| Total Issuances | Financing other items in the Government budget | Refinancing | |
|---|---|---|---|
| Q4 2025/26 | 5,559.1 | 2,492.2 | 3,066.9 |
| August 2026 | 2,628.1 | 600.4 | 2,027.7 |
| FY 2026/27 to date | 6,596.9 | 507.8 | 6,089.1 |
2.3.1 Annualized Yields (Interest Rates) on Treasury Bills
Yields on treasury bills continued to decline in August 2026 except for the 91-day tenor, which remained unchanged at 10.4 percent, compared to the previous month. Yields for the 182-day and 364-day tenors declined to 10.5 percent and 11.0 percent in August 2026 from 10.7 percent and 11.5 percent respectively in July 2026.
Demand for Government securities remained high during the month of August, with all Treasury Bill auctions oversubscribed9. The average bid to cover ratio stood at 2.42, indicating that demand was more than twice the amount offered.
2.3.2 Annualised Yields (Interest Rates) on Treasury Bonds
Except for the 25-year bond, Government held auctions for all other tenors of long-term instruments (T-Bonds) in August 2026. The instruments included the 2-year, 3-year, 5-year, 10-year, 15-year, and 20-year bonds. Just like the previous month (July), yields on Treasury Bonds continued to decline in August 2026 in comparison to the rates registered in previous issuances of similar securities. Yields for the 2-year, 3-year, 5-year, 10-year, 15-year and 20-year reduced to 11.70 percent, 12.0 percent, 13.75 percent, 15.0 percent, 15.20 percent and 15.65 percent down from 12.50 percent, 12.40 percent, 14.25 percent, 15.45 percent, 15.65 percent and 15.95 percent respectively.
The continued decline in yields on both Treasury Bills and Treasury Bonds was mainly driven by strong investor demand, supported by the continued reinvestment of proceeds from maturing Government securities into new issuances. This was facilitated by the large repayments made during the first two months of Quarter one of FY2026/27, amounting to approximately Shs 4,286.44 billion, which provided investors with funds to participate in subsequent auctions.
2.4 Outstanding Private Sector Credit10
The stock of outstanding private sector credit grew by 1.2 percent to Shs 28,088.92 billion in July 2026, from Shs 27,754.90 billion in June 2026. On a year-on-year basis, private sector credit grew by 18.1 percent in July 2026, indicating an improvement in the stock of credit when compared to July 2025.
The growth in credit reflects sustained demand and supply of credit, occasioned by continued resilience in economic activity. The improvement was further supported by reduced lender risk aversion, following a consecutive decline in non-performing loans over the first three quarters of FY 2025/26.
Growth in credit was recorded across both local and foreign currency lending. Shilling-denominated credit increased to Shs 19,280.20 billion in July 2026 from Shs 19,235.22 billion in June 2026, while foreign currency denominated credit increased to Shs 8,808.71 billion from Shs 8,519.68 billion over the same period.
2.5 Credit Extensions11
In July 2026, lending institutions approved Shs 5,162.99 billion in credit for disbursement, out of total loan applications worth Shs 3,648.27 billion. This represents an approval rate of 141.5 percent, the highest rate recorded since the beginning of the calendar year 2026. The high level of approvals partly reflected the processing and approval of loan applications carried forward from previous months, alongside an improvement in non-performing loans (NPLs), which reduced lender risk aversion and supported increased credit approvals by commercial banks.
Unlike in previous months, when personal and household loans accounted for the largest share of credit approved, the transport and communication sector accounted for the largest share in July 2026, at 24.8 percent (Shs 1,280.4 billion). This was followed by building, mortgage, construction and real estate, which accounted for 24.0 percent (Shs 1,237.9 billion). Combined, the two sectors accounted for nearly half of total credit approved during the month.
Other notable recipients of credit included Business, Community, Social and Other Services (18.9 percent), personal & household loans (14.1 percent), Trade (9.3 percent) and Manufacturing (4.9 percent).
3 External Sector Developments
3.1 Merchandise Trade Balance12
In July 2026, Uganda’s merchandise trade with the rest of the world resulted in a deficit of USD 210.03 million. The deficit narrowed compared with the previous month but widened relative to the same month of the previous year.
Year-on-year, Uganda’s merchandise trade deficit widened from USD 11.18 million in July 2025 to USD 210.03 million in July 2026. This expansion was primarily driven by deteriorating trade deficits with Asia and the East African Community (EAC). Conversely, month-on-month performance improved, with the deficit narrowing by 64.5 percent from USD 590.91 million in June 2026 to USD 210.03 million in July 2026. This improvement is attributed to growing trade surpluses with the Middle East and the Rest of Africa, alongside the European Union (EU) shifting from a deficit to a surplus position.
3.2 Merchandise Exports13
On a year-on-year basis, Uganda’s merchandise exports increased by 10.1 percent, rising from USD 1,274.28 million in July 2025 to USD 1,402.56 million in July 2026, representing an increase of USD 128.28 million. The growth in export earnings was primarily driven by higher receipts from gold, maize, flowers, oil re-exports, beer, cocoa beans, cement, electricity, among others.
On a month-on-month basis, total merchandise export earnings increased by 8.9 percent, from USD 1,287.44 million in June 2026 to USD 1,402.56 million in July 2026. The increase was mainly driven by higher earnings from coffee, gold, maize, oil re-exports, cocoa beans and sugar, among others.
Earnings from gold exports increased by 35.0 percent, from USD 584.18 million in July 2025 to USD 788.45 million in July 2026. The increase was driven by higher export volumes and an increase in international gold prices. The rise in global gold prices was partly attributed to increased demand for gold as a safe-haven amid heightened global geopolitical tensions.
Coffee export earnings declined by 18.2 percent on a year-on-year basis, from USD 250.60 million in July 2025 to USD 204.94 million in July 2026. The decline was attributed to lower international coffee prices and a reduction in export volumes. The coffee export price declined from USD 4.20 per kilogram in July 2025 to USD 4.03 per kilogram in July 2026, partly reflecting increased production from Brazil and Vietnam. Similarly, the volume of coffee exports declined from 995,211 60-kilogram bags to 846,686 bags over the same period.
Despite the year-on-year decline, coffee export earnings increased by 16.8 percent on a month-on-month basis, from USD 175.47 million in June 2026 to USD 204.94 million in July 2026. The increase was supported by an improvement in both the export price and the quantity of coffee exported.
Italy remained the leading destination for Uganda’s coffee exports, accounting for 29.3 percent of total coffee export receipts. It was followed by Sudan (15.1 percent), Germany (10.7 percent), Morocco (5.9 percent) and India (4.1 percent).
| Product | Jul-2025 | Jun-2026 | Jul-2026 |
Jul-2026 vs Jul-2025 % Change |
Jul-2026 vs Jun-2026 % Change |
|---|---|---|---|---|---|
| Total Exports | 1,274.28 | 1,287.44 | 1,402.56 | 10.07 | 8.94 |
| Coffee | |||||
| Value Exported | 250.6 | 175.47 | 204.94 | -18.22 | 16.79 |
| Volume Exported (Millions of 60 Kg Bags) | 1 | 0.77 | 0.85 | -15.09 | 9.49 |
| Average Unit Value (US$ per Kg of Coffee) | 4.19 | 3.78 | 4.03 | -3.69 | 6.67 |
| Non-Coffee Formal Exports | 958.33 | 1,029.85 | 1,120.93 | 16.97 | 8.84 |
| of which: | |||||
| Mineral Products | 584.18 | 684.97 | 788.45 | 34.97 | 15.11 |
| Cotton | 1.08 | 1.48 | 1.8 | 66.32 | 22.06 |
| Tea | 5.21 | 5.32 | 5.43 | 4.16 | 2.06 |
| Tobacco | 1.14 | 8.73 | 1.65 | 44.21 | -81.15 |
| Fish & Its Prod. (Excl. Regional) | 14.43 | 10.55 | 10.02 | -30.59 | -5.05 |
| Simsim | 1.34 | 1.1 | 1.2 | -10.78 | 9.16 |
| Maize | 4.8 | 8.18 | 11.68 | 143.31 | 42.73 |
| Beans | 5.78 | 5.48 | 4.87 | -15.81 | -11.22 |
| Flowers | 6.35 | 7.8 | 7.08 | 11.63 | -9.15 |
| ICBT Exports | 65.34 | 82.11 | 76.69 | 17.37 | -6.6 |
3.3 Destination of Exports14
In July 2026, the Middle East remained Uganda’s leading export destination, accounting for 53.5 percent of total merchandise exports. The United Arab Emirates (UAE) accounted for 98.9 percent of Uganda’s exports to the region, largely reflecting the substantial volumes of gold exported to the UAE.
Other key destinations included the East African Community (22.7 percent), the European Union (10.7 percent) and Asia (7.3 percent).
3.4 Merchandise Imports15
In comparison with the same month the previous year, Uganda’s merchandise imports grew by 25.4 percent, from USD 1,285.45 million in July 2025 to USD 1,612.58 million in July 2026. This increase was primarily attributed to an increase in formal private sector imports, which more than offset the decrease in Government project related imports. The key private sector imports include vegetable products, animal, beverages, fats & oils, animal & animal products and petroleum products, among others.
Conversely, on a month-on-month basis, merchandise imports decreased from USD 1,878.35 million in June 2026 to USD 1,612.58 million in July 2026, due to a decrease in formal private sector imports such as petroleum products, chemical & related products, mineral products, prepared foodstuff, beverages & tobacco, plastics, rubber & related products, machinery equipments, vehicles & accessories, among others.
| Jul-2025 | Jun-2026 | Jul-2026 |
Jul-2026 vs Jul-2025 % Change |
Jul-2026 vs Jun-2026 % Change |
|
|---|---|---|---|---|---|
| Total Imports (fob) | 1,285.45 | 1,878.35 | 1,612.58 | 25.45 | -14.15 |
| Government Imports | 11.03 | 11.21 | 10.41 | -5.62 | -7.15 |
| Project | 11.03 | 11.21 | 10.41 | -5.62 | -7.15 |
| Formal Private Sector Imports | 1,262.48 | 1,854.17 | 1,590.69 | 26 | -14.21 |
| Oil Imports | 106.97 | 306.15 | 200.7 | 87.62 | -34.44 |
| Non-Oil Imports | 1,155.51 | 1,548.02 | 1,389.99 | 20.29 | -10.21 |
| ICBT Imports | 11.94 | 12.97 | 11.48 | -3.83 | -11.48 |
3.5 Origin of Imports
In July 2026, the EAC was the largest source of Uganda’s imports, accounting for 46.8 percent of total import bill. This was followed by Asia (37.7 percent), the Middle East (6.1 percent) and the European Union (5.4 percent). Within Asia, the main sources of imports were China, India, Japan and Malaysia, accounting for 41.8 percent, 36.9 percent, 7.0 percent and 3.9 percent, of the total imports from the region, respectively.
3.6 Trade Balance by Region
During the month of July 2026, Uganda recorded a trade surplus with the Middle East, the European Union and Rest of Africa amounting to USD 651.70 million, USD 63.24 million and USD 34.13 million, respectively.
On the other hand, trade deficits were registered with Asia, EAC and the Rest of Europe worth USD 506.33 million, USD 436.68 million and USD 7.39 million respectively.
| Region | Jul 2025 | Jun 2026 | Jul 2026 |
|---|---|---|---|
| Middle East | 426.8 | 549.94 | 651.7 |
| European Union | 111.36 | -6.93 | 63.24 |
| Rest of Africa | -230 | 14.23 | 34.13 |
| Rest of Europe | -12.75 | -6.82 | -7.39 |
| EAC | -54.49 | -505.84 | -436.68 |
| Asia | -235.07 | -611.78 | -506.33 |
| Other Countries | -17.02 | -23.71 | -8.7 |
4 Fiscal Developments16
Preliminary data for August 2026 indicates that Government operations resulted in a fiscal deficit (net borrowing) of Shs 708.85 billion, significantly higher than the planned deficit of Shs 257.62 billion. The higher than planned deficit was primarily driven by lower than targeted revenue collections, coupled with higher than planned Government expenditure during the month.
| Shs Billion | Program | Outturn | Performance | Deviation |
|---|---|---|---|---|
| Revenues (Including grants) | 3,299.1 | 2,895.82 | 87.8% | -403.29 |
| Domestic Revenue | 3,238.15 | 2,872.47 | 88.7% | -365.68 |
| Taxes | 2,975.86 | 2,663.21 | 89.5% | -312.64 |
| Other revenue (Non-tax revenue) | 262.3 | 209.26 | 79.8% | -53.04 |
| Grants | 60.95 | 23.35 | 38.3% | -37.6 |
| o/w: Project support | 60.95 | 23.35 | 38.3% | -37.6 |
| Expense | 3,003.58 | 3,317.45 | 110.4% | 313.86 |
| Compensation of employees | 431.9 | 402.01 | 93.1% | -29.9 |
| Purchase of goods and services | 585.21 | 565.59 | 96.6% | -19.62 |
| Interest | 737.28 | 737.28 | 100.0% | 0 |
| o/w: domestic | 629.12 | 629.12 | 100.0% | 0 |
| o/w: foreign | 108.17 | 108.17 | 100.0% | 0 |
| Grants | 1,020.73 | 1,235.72 | 121.1% | 214.99 |
| Social benefits | 124.03 | 200.52 | 161.7% | 76.5 |
| Other expense | 104.43 | 176.32 | 168.8% | 71.9 |
| Gross operating balance | 295.52 | -421.63 | -142.7% | -717.15 |
| Net Acquisition of Nonfinancial Assets | 553.14 | 287.22 | 51.9% | -265.92 |
| o/w: Domestic Development | 306.23 | 184.87 | 60.4% | -121.36 |
| o/w: External Development | 246.91 | 102.35 | 41.5% | -144.56 |
| Net borrowing (deficit) | -257.62 | -708.85 | __ | __ |
4.1 Total Revenues
During August 2026, total revenue (comprising domestic revenue and grants) amounted to Shs 2,895.82 billion, representing an 87.8 percent performance rate against the monthly target of Shs 3,299.10 billion. This resulted in a total shortfall of Shs 403.29 billion, driven primarily by underperformances in domestic revenue collections and lower-than-target grant receipts.
4.1.1 Domestic Revenues
Domestic revenue and local Government revenue collections totaled Shs 2,872.47 billion, falling short of the target of Shs 3,238.15 billion by Shs 365.68 billion. This was mainly due to shortfalls recorded in both tax collections and other revenue (non-tax revenue).
Tax collections registered a shortfall of Shs 312.64 billion against the Shs 2,975.86 billion target, reflected across all major tax handles: Indirect Taxes recorded the largest shortfall at Shs 170.39 billion, driven primarily by lower-than-projected collections in excise duty (Shs 34.38 billion) largely due to weak performance in key manufacturing sectors, notably beer, cooking oil, and cement. Value Added Tax (VAT) also registered a shortfall (Shs 136.01 billion) mainly due to lower collections from electricity, cement, soft drinks, and the hospitality sector (hotels and restaurants).
Direct Taxes fell short of target by Shs 108.43 billion, largely due to underperformance in corporate taxes, which missed the target by Shs 28.32 billion largely due to lower than expected profitability of firms. International Trade Taxes registered a shortfall of Shs 49.36 billion, largely due to lower-than-expected collections from import duties, excise duties, VAT on imports, and surcharge collections.
4.1.2 Other revenue (non-tax revenue)
Collections under other revenue sources amounted to Shs 209.26 billion, representing a shortfall of Shs 53.04 billion against the target. The underperformance was mainly attributed to lower-than-programmed demand for Government services, particularly passport and visa services, partly due to travel restrictions imposed on Uganda.
4.2 Expenses
During August 2026, total Government expenses amounted to Shs 3,317.45 billion, exceeding the programmed target of Shs 3,003.58 billion by Shs 313.86 billion. The higher than programmed expenses were mainly driven by higher spending on grants, social benefits, and other expenses, which exceeded their respective monthly targets.
Grants amounted to Shs 1,235.72 billion, against the programmed Shs 1,020.73 billion, representing an overrun of Shs 214.99 billion. Of the total grants, Shs 617.77 billion was transferred to Local Governments, while Shs 123.36 billion and Shs 458.69 billion were transferred to tertiary institutions and other agencies. The higher performance in grants was attributed to higher transfers for industrial & economic development, talent identification & development, and Uganda National Airlines.
Social benefits amounted to Shs 200.52 billion, compared to the planned target of Shs 124.03 billion. The higher than planned outturn was mainly attributed to increased expenditure on pensions and gratuities, following the retirement of a number of police and military personnel during the month.
Other expenses amounted to Shs 176.32 billion, which was 68.8 percent above the programmed target of Shs 104.43 billion. The higher outturn was mainly attributed to higher transfers to other Government institutions, including the national sports associations/federations such as the Federation of Uganda Football Associations (FUFA).
4.3 Net Acquisition of Non-Financial Assets
During the month of August 2026, spending on acquisition of non-financial assets amounted to Shs 287.22 billion, a 51.9 percent performance rate against the Shs 553.14 billion programme for the month. Of this, Shs 184.87 billion was domestic development while Shs 102.35 billion was externally financed development spending during the month.
5 East African Community Developments
5.1 EAC Inflation17
Excluding Burundi, annual headline inflation increased across the rest of the EAC Partner States in August 2026, with the highest rate recorded in Rwanda (15.9 percent), followed by Kenya (6.6 percent), Tanzania (4.3 percent) and Uganda (4.1 percent). Burundi’s headline inflation declined to 8.4 percent in August 2026, from 8.7 percent registered in July 2026.
Kenya’s annual headline inflation increased to 6.6 percent in August 2026 from 6.5 percent in July 2026, mainly reflecting higher food and transport costs. The increase in food prices was largely driven by higher prices for oranges, mangoes, Irish potatoes, cabbages and kale (sukuma wiki). Transport costs also remained elevated, partly reflecting supply constraints in international oil markets, with diesel and petrol prices per litre rising to KSh 219.04 and KSh 214.95 in August 2026 from KSh 172.75 and KSh 186.37 respectively in August 2025.
Tanzania’s annual headline inflation increased slightly to 4.3 percent in August 2026 from 4.2 percent in July 2026, mainly reflecting high transportation, housing and utility costs, which more than offset the moderation in food inflation.
Rwanda’s annual headline inflation rose sharply to 15.9 percent in August 2026 from 13.8 percent in July 2026, remaining within double digits for the fifth consecutive month. The increase was mainly driven by higher food prices, particularly vegetables and meat, alongside continued price pressures from transport, housing-related costs, and restaurant and hotel services.
Annual headline inflation in Burundi eased to 8.4 percent in August 2026 from 8.7 percent in July, mainly due to a slower rate of increase in food prices, particularly cereals and vegetables.
5.2 EAC Exchange Rates18
Across the East African Community (EAC), the local currencies registered depreciations against the US Dollar during August 2026, partly due to the conflict in the Middle East that has increased fuel prices thus exerting pressure on demand for the dollar to purchase fuel imports. On average, the Kenyan Shilling, Tanzanian Shilling and Ugandan Shilling depreciated by 0.1 percent, 0.3 percent and 0.7 percent, respectively, against the US Dollar. Similarly, the Burundi Franc and the Rwanda Franc each weakened by 0.2 percent on average during the month.
5.3 Trade Balance with EAC19
During the month of July 2026, Uganda traded at a deficit worth USD 436.68 million with the EAC partner states, a significant deterioration when compared with the trade deficit of USD 54.49 million recorded in July 2025. This deterioration was on account of an 85.5 percent surge in the import bill and a simultaneous 9.7 percent decline in the exports to the region.
Conversely, on a month-on-month basis, Uganda’s trade deficit narrowed from USD 505.84 million in June 2026 to USD 436.68 million in July 2026, on account of decline in imports, which more than offset the decline in exports.
At a country specific level, Uganda traded at a surplus with the Democratic Republic of Congo (DRC), South Sudan and Rwanda worth USD 120.51 million, USD 79.74 million and USD 25.64 million in July 2026. On the other hand, deficits were recorded with Kenya, Burundi and Tanzania amounting to USD 432.62 million, USD 139.02 million and USD 90.93 million, respectively, over the same period.
Uganda imported merchandise worth USD 737.46 million from the three countries, compared to exports of USD 74.89 million. Uganda’s export earnings from these markets therefore amounted to approximately one-tenth of the value of its import bill from the three partner states. The deficit with Kenya and Tanzania is partly explained by the non-tariff trade barriers that exist.
Glossary
| Term | Description |
|---|---|
| Bid to cover ratio | This is an indicator for the demand of Government securities in a given auction. A ratio equal to 1 means that the demand for a particular security is equal to the amount offered by the government. A ratio less than 1 means the auction is under subscribed and a ratio greater than 1 means that the auction is over subscribed. |
| BTI | The Business Tendency Index measures the level of optimism that executives have about current and expected outlook for production, order levels, employment, prices and access to credit. The Index covers the major sectors of the economy, namely construction, manufacturing, wholesale trade, agriculture and other services. The Overall Business Tendency Index above 50 indicates an improving outlook and below 50 a deteriorating outlook. |
| CIEA | CIEA is constructed using seven variables, that is; private consumption estimated by VAT, private investment estimated by gross extension of private sector credit, government consumption estimated by its current expenditure, government investment estimated by its development expenditure, excise duty, exports and imports. Data comes with a lag of one month. |
| Core Inflation | This is a subcomponent of headline inflation that excludes items subject to volatility in prices. It excludes energy, fuels, utilities, food crops and related items. |
| Headline Inflation | This refers to the rate at which prices of general goods and services in an economy change over a period of time usually a year. |
| Non-Performing Loan | This is a sum of borrowed money upon which the debtor has not made scheduled payments for a period usually at least 90 days. |
| Tenor | This refers to the time-to-maturity of a financial instrument, for example, if a certain instrument matures after 91 days – it is called a 91-day tenor. |
| PMI | The PMI is a composite index, calculated as a weighted average of five individual sub-components; New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%), and Stocks of Purchases (10%). It gives an indication of business operating conditions in the Ugandan economy. The PMI above 50.0 signals an improvement in business conditions, while readings below 50.0 show a deterioration. The PMI is compiled on a monthly basis by Stanbic Bank Uganda. |
| Yield to Maturity (YTM) | Yield to maturity (YTM) is the total return anticipated on a treasury instrument if the instrument is held until it matures. |
| Month on Month | Is a way to measure the percentage change in a value from one month to the next. |
| Year on Year | Is a method of comparing data for a specific period (e.g., a month or quarter) with the same period in the previous year. |
Online Resources
Visit us online at mepd.finance.go.ug.
The entire history of data used for this and previous Performance of the Economy Reports - subject to data revisions - can be downloaded at mepd.finance.go.ug/apps/macro-data-portal.
An interactive display of leading economic indicators and a GDP nowcast is available at mepd.finance.go.ug/apps/macro-monitor.
Data on Private Sector Credit, lending rates and CIEA has a lag of one month.↩︎
Data on the external sector is reported with a lag of one month↩︎
Fiscal data is preliminary↩︎
August 2026 data on exchange rates and inflation for D.R.C, South Sudan and Somalia not readily available.↩︎
Data on trade with Somalia is not readily available↩︎
A PMI reading above 50.0 signals an improvement in business conditions, while a reading below 50.0 shows a deterioration↩︎
Data on the CIEA has a lag of one month.↩︎
Data on lending rates has a lag of one month.↩︎
An oversubscribed auction occurs when the total value of bids received exceeds the amount of securities offered.↩︎
Data on Private Sector Credit has a lag of one month.↩︎
Data on Credit Extensions has a lag of one month.↩︎
Statistics on trade have a lag of one month.↩︎
Statistics on trade have a lag of one month.↩︎
Other Countries include: Australia and Iceland.↩︎
Statistics on trade have a lag of one month.↩︎
Fiscal data is preliminary.↩︎
July 2026 inflation data not readily available for Somalia, South Sudan and D.R.C↩︎
August 2026 data on exchange rates for D.R.C, South Sudan and Somalia not readily available.↩︎
July 2026 trade data for Somalia not readily available↩︎