Experts want government to coordinate planning within its agencies to end wastage of resources.
Dr Sarah Ssewanyana, the Executive director of the Economic Policy Research Centre (EPRC) while delivering her key note speech at the pre-budget meeting held at Imperial Royale Hotel last week, said: “... There is a need to implement both revenue generation and expenditure side measures that facilitate meeting budget targets and spending priorities.”
Similarly, Mr Julius Kiiza, a senior research associate at EPRC, said there is a lot of uncoordinated troop movement with each government agency developing its own plan. For instance he said when planning for infrastructure, government should not acquire land for only one road project, then later acquire another for the train and pipeline as this is wastage. He called for improved coordination in their activities to save resources.
Other experts who debated the budget framework paper looking at government allocations to the National Development Plan 2 priority sectors said the wastage of resources and delay in implementation of projects is costing government a lot of money.
The World Bank report released last year warned that the government was losing close to $300m (Shs1 trillion) annually due to inefficient infrastructure spending. The report by the World Bank attributes the losses to under-pricing and inability to complete projects within cost and on schedule.
Under-pricing is when contractors bid at prices lower than the actual project cost to ensure they win tenders, forcing them to engage in deceptive practices such as submitting unwarranted variations and delivering lower standards to break even.
The inefficiencies have been cited for the country’s wide infrastructure deficit which is estimated at $1.4 billion annually for the next five years.
Mr Lawrence Bategeka, the Vice chairperson of the parliamentary committee on the national economy, said government should rethink its position with traditional lenders such as the World Bank and the BRICS countries—Brazil, Russia, India, China and South Africa, so that it benefits from their funding.
“We need to reduce borrowing to finance the national budget,” he said.
Mr Mwanguhya Ndebesa, a political science lecturer at Makerere University, said the Uganda Revenue Authority’s projected revenue collection is Shs15 trillion, which is only 50 per cent of the Shs29.3 trillion budget for 2018/2019.
“This means 50 per cent of the budget will be funded by debt,” he said.
Uganda may need to rethink the role of the state by encouraging direct public investment not only on transport and energy infrastructure, but also on industrialisation to create employment and reduce poverty.
The experts warned that increased public investment, just like commodity booms, can set a stage for a debt crisis.
In Uganda, investment on infrastructure has widened the budget deficit with the potential to cause debt distress in the medium term. The budget deficit could swell to 8 per cent of Gross Domestic Product in 2018/19, compared with the 6 per cent shortfall in 2017/18.
But there is need to watch the debt even if it is still below the 50 per cent mark. Nearly all Uganda’s external debt is now at $11.2 billion (Shs40 trillion), according to figures from the Central Bank.