KAMPALA, Uganda — Uganda will resume negotiations with the International Monetary Fund in September as Kampala seeks a new support programme while preparing for the economic impact of its emerging oil industry.
An IMF staff team will travel to Uganda next month to continue negotiations with the government after earlier discussions ended without an agreement. Kampala requested a new programme following the expiry of its previous IMF arrangement in 2024, placing the September mission at the centre of efforts to establish a new framework for economic support.
Sébastien Walker, the IMF’s resident representative in Uganda, said earlier discussions had made progress but further work remained before an agreement could be reached. The negotiations come at an important moment for one of East Africa’s fastest-growing economies, where strong expansion is being accompanied by pressure on public finances.
Uganda has maintained solid economic momentum despite those fiscal challenges. The IMF projects real GDP growth of about 7.5% in 2026, supported by domestic activity and investment linked to the country’s approaching oil-production era.
Much of the attention now centres on Uganda’s petroleum industry around the Lake Albert region. Major investments include the Tilenga and Kingfisher projects alongside the East African Crude Oil Pipeline, which will transport Ugandan crude through Tanzania to the Indian Ocean port of Tanga.
Commercial oil production is expected to transform the structure of Uganda’s economy. Petroleum exports could strengthen foreign exchange earnings, increase government revenue and attract further investment into infrastructure and related industries. Construction associated with the oil projects has already contributed to economic activity.
The IMF expects production to begin in late 2026, creating the possibility of much stronger growth during the following financial year. However, the scale of that opportunity has also increased scrutiny of Uganda’s debt position and the government’s ability to manage future petroleum revenues responsibly.
Public debt stood at about 52.4% of GDP in the IMF’s latest assessment, while debt-servicing costs continue to absorb government resources. Those pressures could limit Kampala’s ability to increase spending even as the country approaches a period of potentially higher revenues.
Managing that balance will form an important part of the discussions with the IMF. Uganda wants to continue investing in roads, energy and other development priorities, yet maintaining those programmes while controlling borrowing will require greater fiscal discipline.
A new IMF agreement could provide more than additional financing. Such programmes can strengthen confidence among investors and international lenders by providing an external assessment of a government’s economic framework and its commitment to fiscal reforms.
Uganda enters those negotiations from a stronger position than countries seeking IMF assistance during an immediate financial crisis. Economic growth remains robust, inflation has remained relatively contained, and oil production offers the prospect of substantial new economic activity.
Foreign exchange reserves also strengthened during 2025 as coffee exports and portfolio investment supported external earnings. Even so, the IMF continues to identify risks from commodity-price shocks, capital outflows and possible delays to petroleum production.
Oil income will not immediately remove those vulnerabilities because government revenues from the sector will build gradually. IMF projections suggest petroleum income could eventually provide significant additional fiscal resources as production expands over the coming years.
How Uganda manages that money will become one of the defining economic questions of the next decade. Petroleum revenues could finance infrastructure, education, healthcare and industrial development, but weak management could increase debt and deepen dependence on a volatile global commodity.
Uganda has established institutions intended to manage petroleum income, including the Petroleum Fund and mechanisms designed to channel resources towards development. Their effectiveness will face greater scrutiny once commercial production starts and substantial revenues begin entering government accounts.
Experience elsewhere on the continent shows the importance of getting that framework right. Several African oil producers have generated significant export earnings without achieving comparable improvements in economic diversification or living standards, often because commodity dependence left public finances vulnerable to price swings.
Uganda has an opportunity to pursue a different path by using petroleum revenues to strengthen sectors beyond oil. Agriculture, manufacturing, tourism, technology and regional trade could benefit if infrastructure investment lowers business costs and improves access to markets.
The country’s oil development also carries wider implications for East Africa. The East African Crude Oil Pipeline will run about 1,443 kilometres between Uganda and Tanzania, giving landlocked Uganda a direct export route through the Tanzanian port of Tanga.
That infrastructure creates deeper economic links between the two countries while positioning Tanzania as an important partner in Uganda’s petroleum industry. The project could also generate opportunities across transport, logistics, engineering and other supporting industries.
Environmental and social concerns continue to surround the development, particularly because the pipeline crosses ecologically sensitive areas in Uganda and Tanzania. Developers say they have introduced measures to protect communities and reduce environmental damage, while campaign groups continue to challenge aspects of the project.
Those debates underline the broader challenge facing Kampala as it enters the oil era. Uganda must balance economic development, fiscal stability, environmental responsibilities and expectations that petroleum wealth will improve opportunities for its population.
The September IMF negotiations will therefore carry significance beyond another international financing agreement. They come as Uganda moves from years of spending on petroleum infrastructure towards the more difficult task of managing an economy that earns substantial revenue from oil.
Success will ultimately depend on whether Kampala can convert a temporary natural resource advantage into lasting economic capacity. Strong growth and petroleum exports could give Uganda greater financial room, but disciplined borrowing and transparent revenue management will determine how far those gains reach.
A new IMF programme could help establish that framework before oil revenues become deeply embedded in public finances. For Uganda, the coming negotiations represent an early test of how the country intends to manage one of the most important economic transitions in its modern history.
