Uganda has lowered its economic growth forecast for the financial year starting in July to between 6.5 percent and 7 percent, sharply down from a previous estimate of 10.4 percent, the finance ministry said, without giving reasons for the revision.
The ministry published the updated projection late on Thursday in a post on the social media platform X.
In a budget paper released in December, authorities had forecast growth of 10.4 percent, underpinned by expectations that the country would begin oil production during the period. Uganda is planning to start pumping crude from its western oilfields, operated by France’s TotalEnergies and China’s CNOOC, marking a major milestone for the East African nation after years of delays.
The downward revision suggests a more cautious outlook, despite the anticipated start of crude production, which the government has long touted as a key driver of growth, export earnings and fiscal revenues.
Uganda has discovered an estimated 6.5 billion barrels of crude oil reserves, of which about 1.4 billion barrels are considered recoverable. Commercial production is expected to reach a plateau of around 230,000 barrels per day once fully operational, according to government projections.
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Oil development has been slowed in the past by financing challenges, infrastructure constraints and environmental concerns, including opposition to the East African Crude Oil Pipeline (EACOP), which will transport Uganda’s oil to the Tanzanian coast for export.
Economists say that while the start of oil production could provide a significant boost to growth over the medium term, its immediate impact may be more limited, depending on production volumes, global oil prices and the pace of related investments.
Uganda’s economy has been recovering from the effects of the COVID-19 pandemic, global inflationary pressures and tighter financial conditions. Growth in recent years has been supported by agriculture, construction and services, while high interest rates and exchange rate pressures have weighed on private sector activity.
The finance ministry did not explain what factors drove the sharp cut in the growth outlook, but analysts point to risks including delays in oil sector timelines, fiscal consolidation pressures and external headwinds.
Uganda is implementing an economic reform programme supported by the International Monetary Fund, aimed at boosting revenues, reducing deficits and maintaining debt sustainability. Public debt has risen in recent years, largely due to infrastructure spending.
The revised forecast of 6.5 percent–7 percent would still place Uganda among the faster-growing economies in sub-Saharan Africa, although well below the double-digit expansion previously projected.
The finance ministry is expected to provide further details on the outlook and underlying assumptions when it presents the 2026/27 budget later this year.
