UGANDA: CHANGE IN CUMMULATIVE 4-QUARTER BUDGET BALANCE BETWEEN QUARTERS

Fiscal management has become far more erratic, bogged with several technical ‘mumbo jumbos’ of the kind: fiscal responsibility, debt sustainability, fiscal discipline, and many other less useful charters glorifying fiscal policy. Data continues to rebuke fiscal glory.

Chart one

Despite a marked deterioration in fiscal stability since the early 2020s, as seen in Chart one, Uganda has gone on to run far more dangerous deficits in recent quarters than during the COVID-19 pandemic. The implication is not just weaker revenues and stronger spending packages, but also much harder fiscal space to predict, as seen in recent volatility, than decades ago.

Large swings and deficits are not a reliable tool for macroeconomic management.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​ While we still see occasional strong quarters, the magnitude of quarterly changes in the annual budget position has grown significantly, indicating increased fiscal volatility and greater risks to debt sustainability and macroeconomic stability.

My diagnosis is useful for anyone tracking or interested in Uganda’s public finances. Chart two spans a longer period from 1998 to 2026 and highlights a striking difference between the size and nature of deficits up to about Q1 2010 and those that followed to date. Whichever way you like to take the message, fiscal policy rises to infamy.

Chart two