THE IMF has forecast that Uganda’s economy will experience rapid growth, reaching 10.8 percent in the 2025/2026 financial year, thanks to the start of commercial crude oil production. This significant boost follows a projected growth of 6.2 percent for the previous fiscal period, indicating a major uplift driven by the country’s long-awaited entry into the oil market.
In a report released on Wednesday, the IMF noted that oil production would greatly improve Uganda’s fiscal and current account balances. ‘Growth is expected to strengthen, boosted by the start of oil production, which will make a lasting improvement to the fiscal and current account balances,’ the IMF stated.
Uganda is poised to begin production and export of crude oil next year after nearly two decades of delays. Commercial oil reserves were discovered in 2006, but development was held back due to disputes with oil firms and a lack of infrastructure. The country’s reserves are estimated at 6.5 billion barrels, with a peak production capacity of 240,000 barrels per day.
The IMF report also highlighted concerns over Uganda’s declining foreign exchange (FX) reserves, which fell from $3.7bn in December 2023 to $3.2bn in June 2024. The IMF urged Uganda’s central bank to take action, recommending a reduction in government imports, stepped-up FX purchases, and greater exchange rate flexibility to stabilise reserves.
The anticipated economic boost from oil production marks a significant turning point for Uganda, which has been working to overcome the barriers that have delayed its entry into the global oil market. The growth forecast, if realised, could transform the country’s economic landscape in the coming years.
