Uganda’s Fiscal Deficit Performance and Institutional Readiness for the East African Community Monetary Union

Abstract

Fiscal discipline is one of the primary macroeconomic convergence requirements under the East African Community (EAC) Monetary Union Protocol. This article examines Uganda’s fiscal deficit performance against the 3% of GDP ceiling from FY2014/15 to FY2024/25 and considers how experts involved in Uganda’s convergence process perceive its relationship with institutional readiness. The study used a convergent parallel mixed-methods design. The quantitative strand combined the official fiscal series with a five-point Likert questionnaire completed by 22 of 28 reachable experts (78.6%) drawn from the small, specialised population identified for the study; the qualitative strand comprised six purposively selected key informants and documentary review. The questionnaire measured perceived fiscal deficit performance, policy harmonisation, legal-framework alignment, inflation performance and public-debt performance using six-item composite scales, with Cronbach’s alpha coefficients ranging from 0.83 to 0.90. The regression specification treated perceived policy harmonisation as the dependent variable and perceived fiscal deficit performance as the focal predictor, controlling for perceived inflation and public-debt performance. Uganda’s official fiscal series shows that the deficit exceeded the EAC ceiling in all eleven fiscal years, ranging from 3.5% to 9.4% of GDP and averaging 5.75%. Expert respondents associated the deficit most strongly with infrastructure investment, recurrent expenditure and borrowing; documentary evidence indicates that the relative importance of these pressures varied by period, with recurrent expenditure and interest costs prominent in FY2024/25. Perceived fiscal performance was strongly associated with perceived policy harmonisation (r = .891, 95% CI [.75, .95]) and legal-framework alignment (r = .895), while the regression coefficient for fiscal deficit performance was statistically significant (B = .699, β = .706, p = .005). However, substantial multicollinearity, common-source measurement and the small near-census population limit the precision and external generalisability of these estimates. The findings are therefore interpreted as exploratory associations rather than causal effects. Weak monitoring and evaluation, incomplete implementation of earlier EAC integration protocols and limited political commitment were the most highly rated challenges. The study contributes Uganda-specific, triangulated evidence on fiscal convergence and institutional readiness and identifies areas for more systematic longitudinal and cross-country research.