The study was set to examine how budgeting improve financial performance in public hospitals in Uganda, focusing on Soroti Referral Hospital as a case study. The study was based on three objectives: To establish whether budgetary policies and procedures are complied with to enhance financial performance in Soroti Referral Hospital, to establish whether budgetary control process has enhanced financial performance, to establish whether budgeting has ensured proper resource allocation to enhance financial performance and to establish challenges affecting budgeting and budgetary control to ensure improved financial performance in Soroti Referral Hospital. The study targeted on a total population of 60 from Soroti Referral Hospital staff and a sample of 52 respondents was selected using Neumann formula (2000). A descriptive research design was employed and both quantitative and qualitative approaches of data collection were used. Data were analyzed using descriptive statistics, multiple regression analysis; where the statistics proved that 79.4% significance level was found and the hypothesis testing proved that there is a positive relationship between budgeting and financial performance in Soroti Referral Hospital. The study findings revealed that correlation result (r=0.787, P<0.000) for budgetary policies and procedures indicates that Soroti Referral Hospital complies with budgetary policies and procedure; (r=0.785, P<0.000); result (r=0.784, P<0.000) for resource allocation; also indicates that resource allocation leads to no waste of government funds given to the hospital; and (r=0.789, P<0.000) for challenges affecting budgeting; also affects hospital financial performance and (r=0.793, P<0.000) for financial performance. This indicates that there is significant relationship between budgeting and financial performance in SRH. The study concluded that when budgetary policies and procedures are complied with SRH enhance financial performance, due to proper budgeting and budgetary controls, the hospital was able to allocate resources properly and it was also discovered that there is still existing challenges affecting budgeting and budgetary control to ensure improved financial performance of Soroti Referral Hospital. The study recommended that the Hospital finance administrators should establish financial transparency and well stipulated set rules for budgeting and accountability reports for the hospital finances. Such rules should encourage flexibility, creativity, and personal integrity.

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