A 10 year water balance has been assessed for the Barekese Reservoir using an integrated Remote Sensing and GIS approach for estimation of surface runoff based on Soil Conservation Service Curve Number (SCS-CN). The SCS-CN model produced an R2 value of 0.84 and an efficiency of 82.68%. Monthly observed reservoir levels were used for the calibration and validation of the water balance model. The water balance model produced an R2 value of 0.84 and an efficiency of 81.9%. The monthly water budget revealed that total catchment runoff and direct precipitation respectively constituted 94.32% and 5.68% of the inflows while spilled water, water withdrawal and evaporation respectively amounted to 72.19%, 20.85% and 6.96% of the outflows. This result reveals that the reservoir is being underutilized. The current average production of treated water is 109,000m3/day but the reservoir can safely yield the design capacity of 220,000m3/day and an additional average hydropower of 368.6kW in six months during the rainy season provided the economic analysis for the hydropower generation is found to be justifiable.