Monday May 12 2014

Finance shifts big percentage of budget funds to devt expenditure

Mr Keith Muhakanizi, Secretary to the Treasury,

Mr Keith Muhakanizi, Secretary to the Treasury, addresses members at the pre-budget dialogue in Kampala last week. He said there has been fiscal discipline in government agencies. PHOTO BY R AJWANG 


The Ministry of Finance, Planning and Economic Development has announced that it is making a radical change in budgetary allocation by shifting a large percentage of funds from recurrent expenditure to development expenditure to spur national development.

Records at the Ministry of Finance show that more than 50 per cent of the budget funds, is now being allocated to development financing (development expenditure).

Speaking during a pre-budget dialogue between the civil society/NGOs and the Ministry of Finance, Planning and Economic Development on the forth coming National Budget held last week in Kampala, the Secretary to the Treasury, Mr Keith Muhakanizi, said they are reducing the percentage of the recurrent expenditure.

“Recurrent expenditure is likely to go down further because the Ministry of Finance is shifting money to development expenditure on things like energy and road infrastructure,” he said.

Over the years, the government has faced increasing criticism from civil society groups for committing substantial funds on consumption rather than development budget.

Mr Muhakanizi said: “While allocation of the budget is political in nature, it is the duty of the Secretary to the Treasury and the accounting officers (technical people) to implement the budget.”

On the fiscal discipline, which has been an issue in the way the budget money is spent in the ministries, departments and agencies, Mr Muhakanizi said due to strict accountability, monitoring and evaluation the Ministry of Finance has put in place, there is now fiscal discipline, which has led to reduction in supplementary budgets.

He said for the first time this year, State House did not ask for a supplementary budget.
“This shows that fiscal discipline is beginning to take place,” he said.

Expert advice on allocation of funds
Speaking on how the budget should be programmed, Prof Augustus Nuwagaba of Makerere University said Uganda needs to do a flagship budget where the government concentrates on a specific sector and channel enough funds for that specific sector.

“In this country, as you may be aware, 70 per cent of the population is in the agricultural sector, so government should make agriculture a flagship of the budget to improve productivity in agricultural sector,” he said.
On accountability, which is on top of ministry of Finance’s initiative to ensure effectiveness of the budget by the accounting officers, Mr Nuwagaba said accountability should not stop at papers written in the Ministry of Finance, but responsible officers should account for the budget performance.

He noted that while the Ministry is making reforms, it is concentrating on systems, structures and procedures of utilisation of the budgeted funds yet they are not the ones to deliver but the people in government.

main terms
Recurrent expenditure: Recurrent expenditure is on-going expenditure expenses that occur repeatedly which do not result in the creation or acquisition of fixed assets such as salaries, tenancy, manager revenue and expense components and travelling expenses.

Development expenditure
On the other hand, development expenditure refers to expenditure on infrastructure development, public enterprises or development of agriculture to increase productive capacity in the economy and bring income to the government.