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Ramathan Ggobbi PSST, Ministry of Finance
To complement the central bank's tight monetary policy, the Ministry of Finance has slashed planned operational spending for the second quarter of Financial Year 2026/27 by nearly Shs3 trillion. While total releases for Q2 operations stood at Shs21.82 trillion, Accounting Officers have received strict directives to freeze non-essential spending on benchmarking trips, workshops, consultancies, and foreign travel.
The government has instructed all Ministries, Departments, and Agencies (MDAs) to cut spending on fuel, travel, workshops, and other consumables by half as it moves to enforce strict fiscal austerity amid the worst Ugandan Shilling depreciation recorded in 33 years.
The sharp policy shift follows a steep decline in the local unit, which collapsed past the Shs4,400 mark against the US dollar at Bank of Uganda (BoU) official counters by close of business on Friday. Intra-day trading saw the currency briefly touch the Shs4,500 threshold.
Confirming the market volatility, Mr Stephen Kaboyo, a financial analyst and Partner at Alpha Capital Partners, noted that the brief slide to the Shs4,500 mark represents the currency's weakest level since 1993. The slide marks a significant deterioration from the start of the year, when the Shilling traded at approximately Shs3,620 per dollar. At the current exchange rate, an import valued at $100 that cost Shs362,000 in January now costs Shs450,000, representing an extra burden of Shs88,000 for local businesses and consumers.
Announcing the expenditure cuts, the Permanent Secretary and Secretary to the Treasury (PSST), Mr Ramathan Ggoobi, explained that the government is taking direct steps to curb demand and support broader macroeconomic stability.
“The first major signal of a central bank is to tell you to tighten right now. And they are not telling banks alone; they are telling every economic agent,” Mr Ggoobi said. “For instance, if you have a car and you are used to buying a full tank and giving people rides back home, this is the time you drop yourself home strictly. You may drive, but don’t drive aimlessly.”
To complement the central bank's tight monetary policy, the Ministry of Finance has slashed planned operational spending for the second quarter of Financial Year 2026/27 by nearly Shs3 trillion. While total releases for Q2 operations stood at Shs21.82 trillion, Accounting Officers have received strict directives to freeze non-essential spending on benchmarking trips, workshops, consultancies, and foreign travel.
“If you had a budget for fuel of Shs5 million in a month, now we have released Shs2.5 million. Reduce the trips. If you are going to go to Kabale to attend a workshop, now attend it online. That is what austerity measures mean at a government level. That is why we released less money in quarter two on conservative items,” Mr Ggoobi added.
However, the Treasury boss emphasized that core economic sectors remain
Daily insulated from the budget cuts to prevent an economic slowdown.
Daily Monitor
