Govt earmarks sh1.4 trillion for paying domestic arrears

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The Government has allocated shillings 1.4 trillion for the payment of domestic arrears and warned accounting officers against creating new ones.

Finance ministry permanent secretary Ramathan Ggoobi said on Friday (July 11, 2025) that accounting officers who create new domestic arrears will be sanctioned and their contracts will not be renewed.

He issued the warning while issuing a budget execution circular for the 2025/26 financial year. A report from the Parliamentary finance committee, released in April 2025, revealed that the Government will take 12 years to clear its domestic arrears of over shillings 13.8 trillion.

The report cited the Auditor General, who noted that domestic arrears had increased from 10.5 trillion in the 2022/2023 financial year.

Arrears are financial obligations of the Government that remain unpaid beyond the fiscal year in which they were incurred and due.

They can arise in many categories of public expenditure, including compensation of employees, purchases of goods and services, court awards, development/capital projects.

According to the finance ministry, generally, the main causes of accumulation of arrears are failure to comply with existing regulations or policies and lack of proper control in the public finance management systems.

Arrears are a form of debt and pose a serious risk to the financial management, sustainability, and reputation of the country, the ministry says.

‘Govt committed’

Ggoobi said this year’s budget starts the implementation of the fourth National Development Plan and the tenfold growth strategy, adding that the Government remains committed to implementing the fiscal consolidation agenda.

He also said all procurements and payments must be conducted in Uganda shillings, since the budget is appropriated in Uganda shillings.

Ggoobi, who is also Uganda’s secretary to the Treasury, urged accounting officers to convene finance committee meetings to agree on priorities for the quarter and allocation of funds to cost centres and departments.

He said he will next week communicate to the country the quarter one expenditure limits for the current financial year.