Bank of Uganda Governor Dr Michael Atingi-Ego has warned that lower-than-projected oil revenues, delays in fiscal consolidation and severe climate shocks could increase debt service costs, weaken reserve accumulation and complicate efforts to manage inflation.

Atingi-Ego made the remarks on Monday while appearing before Parliament's Budget Committee to present the central bank's assessment of the Charter of Fiscal Responsibility for the financial years 2026/27 to 2030/31.

The Charter sets out the government's fiscal policy framework and targets for the next five years, including the path towards fiscal consolidation and debt sustainability.

Atingi-Ego described the Charter as broadly credible but said its success would depend on transparent monitoring and management of the risks that could undermine its objectives.

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"The Charter is broadly credible and can provide the fiscal consolidation path if key fiscal risks are transparently monitored," Atingi-Ego told the committee.

However, he cautioned that lower oil revenues could put pressure on government finances and complicate the assumptions underpinning the fiscal framework.

"Lower than projected oil inflows, delays in fiscal consolidation and intense climate shocks could increase debt service costs, weaken reserve accumulation and complicate inflation management," he said.

The Governor also called for greater discipline in government expenditure, warning that fiscal restraint would be central to achieving the objectives set out in the Charter.

"Government needs to have discipline in its expenditures in order to realise the objectives of the Charter. Fiscal discipline will be key," he said.

The warning comes as Uganda prepares for a period in which oil revenues are expected to become increasingly important to public finances, while the government continues to manage debt obligations and pursue investments in infrastructure and other development priorities.

The Charter is intended to provide a framework for maintaining fiscal discipline while supporting economic growth and ensuring that public debt remains sustainable.

However, committee members raised questions about the realism of some of the projected growth and debt targets, particularly in light of global and domestic economic uncertainties.

The committee later heard from officials of the Economic Policy Research Centre (EPRC) at Makerere University, who raised concerns about the process used to develop the new Charter.

Led by Dr Brian Sserunjogi, the EPRC team said the absence of an evaluation of the previous Charter was a significant gap that could make it difficult to assess what had worked and what needed to change.

"There are clear plans for debt sustainability by 2030/2031, but the Ministry of Finance must put into context the global shocks. Also, no evaluation of the old Charter was done to inform the new one, which is a gap," Sserunjogi said.

The EPRC also urged the Ministry of Finance to ensure that the fiscal projections take sufficient account of external shocks that could affect Uganda's economy during the five-year period.

The submissions from the central bank and EPRC put the focus on both the substance of the proposed fiscal framework and the assumptions underpinning it.

While the Bank of Uganda considers the Charter broadly credible, Atingi-Ego's warning highlights the possibility that weaker oil inflows, climate-related disruptions and delays in reducing fiscal pressures could affect debt servicing, foreign exchange reserves and inflation.

The EPRC, meanwhile, has questioned whether lessons from the previous Charter were adequately assessed before the new framework was prepared.

The Budget Committee is expected to consider the submissions as it scrutinises the proposed Charter of Fiscal Responsibility for the 2026/27-2030/31 period.