Over time, we have heard the President saying “Uganda is on a move to fully finance her national budget”. From the available National Budget Framework Paper (NBFP) for Financial Year 2018/19, the dream seems still far from realisation. The report points out different sources in which the government intends to source its financial resources for the financial year 2018/19.
Among them include both private and external borrowing. It should be noted however that, the country is currently faced with many social economic challenges stretching from salary strikes by civil and some private sector workers, drought in many parts of the country, un-accounted for killings like the recent Bukomansimbi tragedy on the new year’s eve not forgetting earlier killings, increased poverty levels to mention but a few all of which whose solutions are dependent on financial and economic soundness of the country.
The NBFP stipulates that the government is to run a budget of about Shs29.274 trillion of which only Shs12.744 trillion (43.5%) will be available for service delivery - excluding budget and project support, debt repayments and domestic financing.
In terms of external funding, the government intends to borrow money on both concession al and non-concessional terms. It is projected that about Shs5.2trillion is going to be sourced from external lenders. “Painfully,” non-concessional loans will be taking the largest share of about 52.64 per cent of the total loans. Notwithstanding this, the government intends to borrow domestically about Shs940 billion.
Even though for years, the government has defended Uganda’s debt to be at a sustainable level i.e. below the 50 per cent threshold, the distress from debt is currently felt by all Ugandans. For instance, in the same NBFP for 2018/19, interest rate payment to local and external loans obligation is projected to be Shs2.7 trillion, which is about 12.3 per cent of the entire budget. In fact, interest rate payments on loans for the coming financial year will be the second most prioritised area for the government after transport and works.
Different Annual Auditor General’s reports for years have highlighted a number of anomalies in the use of borrowed funds. These include; unspent funds, procurement related delays, compensation challenges among others.
According to the 2017 Annual Auditor General’s report, the people of northern Uganda missed the construction of Ajeleck, Opot and Ojanal bridges due to improper management of the project by the concerned officials which resulted into returning of unspent Shs6b to Islamic Development Bank.
Richard Ssempala, research
associate at Uganda Debt Network