KAMPALA, Jan. 1 (Xinhua) -- Uganda has been racing to bring its oil and gas fields in the west of the country into commercial production, a long-awaited milestone that officials said could propel the East African nation onto a path of double-digit economic growth from 2026.
Ugandan President Yoweri Museveni struck an optimistic tone in his New Year message Wednesday night, saying Uganda's future is bright as the first commercial oil output is expected to come on stream.
Oil and gas development is defined as one of four strategic pillars underpinning Uganda's long-term development plan to expand the economy tenfold -- from about 50 billion U.S. dollars to 500 billion dollars by 2040. The other pillars are agro-industrialization, tourism, and science, technology, and innovation.
At a conference held in December in Kampala, the country's capital, Michael Atingi-Ego, governor of the Bank of Uganda, said oil revenues could be transformative if managed prudently.
"Oil revenues should be used to finance human capital, infrastructure, and institutions, assets that endure long after the oil has been depleted. This is how we transform finite resources into infinite possibilities," Etingi-Ego said.
The World Bank echoed the positive outlook in its latest Uganda Economic Update published on Dec. 24, saying that the country's growth is expected to accelerate as oil production begins in the 2026/2027 financial year, with substantial revenues flowing in the following year.
Despite global headwinds, the World Bank noted that Uganda's economy recorded robust and broad-based growth in the 2024/2025 financial year, supported by strong domestic demand and solid performance across agriculture, tourism, industry, and services.
Inflation remained below the central bank's 5 percent target, the shilling stayed stable, and the external position improved on the back of rising coffee and gold exports, the report said.
"Uganda's economic growth remains strong, with real gross domestic product rising to 6.3 percent in the financial year 2024/2025, up from 6.1 percent the previous year," the report added.
Government projections are even more bullish. In its National Budget Framework Paper for fiscal years 2026/2027 to 2030/2031 issued in mid-December, the Ministry of Finance, Planning, and Economic Development forecasted growth of 10.4 percent by the end of the 2026/2027 financial year, up sharply from an estimated 6.6 percent in 2025/2026.
The ministry said the start of oil production would generate significant revenues and spur productivity through linkages across sectors, lifting the size of the economy from more than 70 billion dollars to over 81 billion dollars within a year.
Sustained growth is also expected to translate into poverty reduction. The World Bank projected that poverty declined in 2024/2025 and will continue to fall in 2026 and 2027 if current trends hold.
However, the bank warned of mounting fiscal pressures, including a widening deficit and rising debt-servicing costs, calling for a return to fiscal consolidation. ■