Govt Freezes New Road Projects as Budget Shortfall Forces Shift to Clearing Arrears

Government has halted new road construction projects for the 2026/27 financial year and will instead prioritise completing ongoing works and clearing nearly Shs948 billion in outstanding arrears amid severe budget constraints.

The government has announced a halt on all new road construction projects in the 2026/27 financial year, citing severe budgetary constraints and a growing backlog of unpaid obligations in the infrastructure sector.

Appearing before Parliament’s Physical Infrastructure Committee, Works and Transport Minister Katumba Wamala revealed that the ministry will instead prioritise completing ongoing projects and settling outstanding arrears after receiving onlyShs690.5 billion—far below the Shs2.3 trillion it had requested.

“The Ministry is saying, let us finish ongoing projects as a priority,” Katumba told legislators, emphasizing the urgent need to address systemic bottlenecks, particularly land acquisition challenges that continue to stall contractors already on site.

He noted that delayed compensation for land has significantly affected project timelines, leaving contractors unable to proceed despite active contracts. The new strategy will therefore prioritise funding for land acquisition to ensure uninterrupted project execution.

The decision also aligns with a broader government directive from the Ministry of Finance, Planning and Economic Development, which has instructed all agencies to halt the initiation of new projects and instead focus on clearing domestic arrears.

Accounting Officers risk penalties if they fail to comply.

According to the ministry, Uganda’s infrastructure sector is currently burdened by substantial unpaid obligations.

The Ministry of Works and Transport alone closed the 2024/25 financial year with arrears totaling Shs1.489 trillion. Although Shs541 billion has since been paid, an outstanding balance of Shs948 billion remains.

Dr. Edward Ssimbwa, Commissioner for Public Structures, warned that failure to clear these arrears will only worsen the situation.

“These arrears are attracting interest—this is essentially free money going. If they are not cleared, the financial burden will continue to grow,” he said.

With no specific allocation yet earmarked for arrears clearance in the upcoming financial year, concerns are mounting over the ministry’s ability to both settle debts and sustain ongoing works within the constrained budget.

The move signals a period of fiscal tightening in Uganda’s infrastructure development, potentially slowing expansion but aiming to stabilise a sector weighed down by debt and inefficiencies.