Why the Budget hit Shs24 trillion

Kampala-Experts say Uganda needs Shs24 trillion to fund large-scale infrastructure projects in the new financial year.

Priority sectors for 2015/16 include Works and Transport, Energy and Security, among others, to raise productivity and investment in the economy.

World Bank senior country officer Rachel Kaggwa Sebudde on Monday said: “Increasing the size of the Budget is worthwhile to fill in the gaps to attain economic development.”
Ms Sebudde said there is nothing wrong with Shs24 trillion Budget if the money is going to be used appropriately. However, she noted that the problem is how much of total budgeted fund goes into productivity and investment to bring about economic development.

Challenges
For about 10 years, the government has maintained high spending in infrastructure development such as roads and energy, among other capital investment projects, to accelerate development.

However, this has often been hampered by delays in project implementation and poor absorption capacity in government ministries, resulting in poor performance of the Budget.

The International Monetary Fund Mission chief and Senior Resident Representative in Uganda, Ms Ana Lucía Coronel, says infrastructure investment should be consistent with the economy’s absorptive capacity to prevent inflation.

Ms Lucía said Uganda needs Shs24 trillion to support development projects and economic growth of 5.8 per cent.
Economic growth is projected to reach 5.8 per cent in FY2015/16 (compared to 4.5 per cent in FY2013/14), led by scaled-up public investment and supported by stronger credit growth.

Principal Research fellow at Economic Policy Research Centre, Dr Ibrahim Kasirye, said the increase in Budget cannot be justified by domestic revenue collection.

“Our revenue collection is still low; this means government will be borrowing money to finance its deficit in the public expenditure, which is burdensome to the economy,” Mr Kasirye said.
Senior manager at KPMG, an Audit firm, Dr Fred Muhumuza, told Daily Monitor that the Budget shot up to Shs24 trillion because of Shs6.4 trillion meant to cater for public debt repayment.

The plus about debt payments

Hinting on the Shs6.4 trillion debt payments, managing director of Alpha Capital, Mr Stephen Kaboyo said this will lead to investor confidence because it provides transparency in government financing and its debt payment obligation to stakeholders.

Much as Uganda has carried out reforms since 1987, the country still faces challenges of implementing, laws, policies and investment projects.

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