Background: The National Health Policy 2000 - 2009 and Health sector strategic plans I & II emphasized that Primary Health Care (PHC) would be the main strategy for national development and would be operationalized through provision of the minimum health care package. Commitment was to spend an increasing proportion of the health budget for the provision of the basic minimum package of health services which was interpreted to mean increasing spending at health centre level. This analysis was undertaken to gain a better understanding of changes in the way recurrent funding is allocated in the health sector in Uganda and to what extent it has been in line with agreed policy priorities.

Methods: Government recurrent wage and non-wage expenditures - based on annual releases by the Uganda Ministry of Finance, Planning and Economic Development were compiled for the period 1997/1998 to financial year 2007/2008. Additional data was obtained from a series of Ministry of Health annual health sector reports as well as other reports. Data was verified by key government officials in Ministry of Finance, Planning and Economic Development and Ministry of Health. Analysis of expenditures was done at sector level, by the different levels in the health care system and the different levels of care.

Results: There was a pronounced increase in the amount of funds released for recurrent expenditure over the review period fueled mainly by increases in the wage component. PHC services showed the greatest increase, increasing more than 70 times in ten years. At hospital level, expenditures remained fairly constant for the last 10 years with a slight reduction in the wage component.

Conclusion: The policy aspiration of increasing spending on PHC was attained but key aspects that would facilitate its realization were not addressed. At any given level of funding for the health sector, there is need to work out an optimal balance in investment in the different inputs to ensure efficiency in health spending. Equally important is the balance in investment between hospitals and health centers. There is a need to look comprehensively at what it takes to provide PHC services and invest accordingly.