Economy remains stable as gov’t spends Shs 1.7 trillion on elections

The government spent at least Shs 1.508 trillion on general elections this year – with the Electoral Commission accounting for Shs 1.147 trillion of the expenditure as of April this year.

This is part of close to Shs 1.7 trillion total that was released by the ministry of Finance, Planning and Economic Development to all the ministries, departments and agencies (MDAs) involved in the exercise.

This money, according to the ministry’s post-election economic and fiscal update, was spent over the course of three years as the government prepared the elections that climaxed early this year.

The Public Finance Management Act (PFMA) Cap 171, requires the Finance minister to publish a post-election economic and fiscal update not later than four months after the polling day for a general election.

The update shows that the total funds required by the various MDAs involved in the preparation and conduct of the general elections for the whole electoral roadmap was Shs 1.24 trillion, with the Electoral Commission taking the lion’s share (Shs 838.71 billion).

At least Shs 76 billion was budgeted and released for election-related activities in the financial year 2023/24, while Shs 312.4 billion and Shs 1.31 trillion was budgeted for election activities in 2024/25 and 2025/26, respectively, bringing the total to about Shs 1.7 trillion, which was released in full.

The variance between the initial total requirement and actual releases reflects supplementary allocations driven by emergent security requirements and inflationary adjustments in logistical procurement, according to Permanent Secretary and Secretary to the Treasury (PSST) Ramathan Ggoobi.

On the whole, Ggoobi says, the post-election economic environment remained stable as the economy continued to demonstrate resilience, supported by strong growth, low inflation and stable currency, amidst global challenges.

“Most macroeconomic parameters remain as estimated before the polling date as captured in the pre-election and fiscal update. The domestic economy remains resilient despite a challenging global economic environment characterised by subdued global growth, geopolitical tensions, and volatile commodity markets,” says Ggoobi.

Economic growth in the financial year 2025/26 is projected at 6.6 per cent as indicated by the high-frequency indicators of economic activity that show continued strengthening of domestic activity in the third quarter of this financial year.

Additionally, inflation remained low and stable, while the external position with the rest of the world improved, supported by increased export receipts and sustained foreign exchange inflows from tourism, foreign direct investments (FDI) and remittances.

On the fiscal front, the deficit for this financial year has been revised downwards from 7.8 per cent to 7.0 per cent of GDP. This adjustment reflects lower-than-projected expenditure outturns, particularly on externally financed projects whose performance remains low.

“The successful conclusion of the general elections gives us the opportunity to continue strengthening the efficiency and effectiveness of fiscal policy to increase productivity and speed up the process of socioeconomic transformation in line with Government’s aspirations,” Goobi says, adding that major emphasis will be put on investments in agro-industrialization, tourism, mineral-based development (including oil and gas), and science, technology & innovations as well as continued rollout of the Parish Development Model (PDM). 

Going forward, the government says it will continue to focus on policy priorities that strengthen domestic revenue collection, maintain fiscal discipline, support private sector development, and promote export diversification. 

Additionally, preparations for oil production “have been carefully managed” to ensure that resource revenues contribute to sustainable and inclusive growth, according to Ggoobi.

The view of the government aligns with analyses by economists at Makerere University-based research firm, Economic Policy Research Centre (EPRC), who agree with the assessment, while highlighting short-term disruptions from election spending and uncertainty, alongside the need for fiscal consolidation and reforms.

EPRC notes short-term turbulence from election spending but says there was potential for a rebound via revived credit, market optimism, and infrastructure. Preliminary data show that government operations in the third quarter (January to March) of 2025/26 resulted in a fiscal deficit (net borrowing) of Shs 3.74 trillion, which is lower than the initially planned deficit of Shs 4.3 trillion for the quarter.

This was mainly on account of lower-than-planned expenditure during the quarter, which more than offset the impact of the shortfalls in domestic revenues and grants. On the expenditure side, government spent a total of Shs 12.28 trillion (expenses plus acquisition of non-financial assets) against the planned expenditure of Shs 13.67 trillion.

Both expenses (current spending) and acquisition of nonfinancial assets (development spending) performed below their respective programs for the quarter. This was partly due to spending in quarter two on items meant for quarter three, mainly to fund preparations for elections, cater for infrastructure, among others.

This resulted in the funds released for quarter three to be less than initially programmed, thus the lower expenditure outturns. Expenditure on the acquisition of non-financial assets amounted to Shs 1.78 trillion against a planned target of Shs 2.1 trillion. 

This underperformance was attributed to implementation challenges in externally funded development projects, particularly delays in meeting counterpart funding obligations and protracted procurement procedures, which slowed down project execution.

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المصدر: The Observer (Uganda)