Monday June 8 2015

Government to fund 44.5% of Uganda’s Budget

The National Budget briefcase that the Finance Minister

The National Budget briefcase that the Finance Minister usually displays on the day when the Budget speech is presented to the country. In this financial year ending, government funded about 80 per cent of the Budget. FILE PHOTO 


Kampala- The Civil Society Budget Advocacy Group (CSBAG0, a coalition of different organisations, has asked government to tighten financial out flows and increase tax revenue ahead of 44.5 per cent government funded Budget.

Addressing the media yesterday ahead of the budget reading, Mr Emmanuel Byaruhanga, a member of CSBAG, said the government is sliding back in the 1980s where its budget was funded by donors and borrowing.

“We caution government against going back to the 1980s and 1990s where capacity to generate its own resources and determine its own destiny was constrained by inability to finance the budget adequately,” Mr Byaruhanga said in Ntinda.
Government’s total revenue from both taxes and non-tax is projected at Shs11 trillion.

To fund the Shs24 trillion budget, government will have to borrow either internally or externally.

To increase the revenue base, Mr Byaruhanga suggested, “This can be through strengthening tax administration, curbing illicit financial flows and imposing other revenue generations measures such as road tolls, environment tax and graduated tax….”

In the Financial year 2014/15, government funded up to 80 per cent of the budget at time when most donors pulled out over the signing of the anti-Homosexual Bill that was later struck down by court.

The government did this through introducing new taxes and scrapping off tax exemptions.

On the promise by President Museveni during the State-of-the nation address that government will recapitalise Uganda Development Bank (UDB) with Shs500 billion in next financial year, Mr Byaruhanga says: “60 per cent of Ugandans derive their income from small hold farms and they donot require UDB. They need the national agriculture bank.”

Mr Julius Kapwepwe, the Director of Programmes Uganda Debt Network, said the country’s external debt is estimated at Shs22 trillion a figure that excludes billons for Karuma and Isimba constructions, oil refinery and pipe line the Standard Gauge railway and another Shs9 billon for other sector projects meaning the external debt stands at Shs6 trillion of the 2015/16 budget.

He appealed to government to stringently follow through on prosecution and recovery of all public funds proven to have been embezzled.

Impact of growing debt in Uganda

Projections are that Uganda’s external debt will likely grow by Shs4.5 trillion next financial year. This is in addition to another Shs1.5 trillion which government intends to borrow domestically.

Analysts say if Uganda’s debt is left unchecked, it has the potential to affect our daily lives significantly. “Eventually, the government may find it harder to finance its debt which may subsequently mean higher interest rates or a lower value of the Shilling.