Government Allocates Shs 1.4 Trillion to Clear Domestic Arrears

KAMPALA — The Uganda Revenue Authority (URA)-backed budget for 2024/25 earmarked Shs 1.4 trillion to settle government domestic arrears owed to local suppliers, contractors and service providers.
Budget analysts say this is “a much-needed shot in the arm” for the private sector, relieving cash-flow pressures and boosting confidence. The overall budget is fixed at Shs 72 trillion, with URA required to mobilise Shs 33.182 trillion in revenue.
However, concerns remain about sustainability: a projected Shs 35 trillion deficit looms, with new borrowing of around Shs 20 trillion expected, and interest payments on treasury bills and bonds set to rise sharply.
Experts argue that timely payments to local firms will improve tax compliance and stimulate economic activity, but they warn that without reforms in revenue mobilisation and spending discipline the debt burden could hamper development.