2016 Budget hits record Shs24 trillion

Parliament- The government has presented a Shs24.1 trillion Budget for the 2015/16 Financial Year, up from this year’s Shs15 trillion.

This is the second time in many months the government has revised upwards its 2015/2016 Financial Year (FY) Budget estimates.

The confirmation is contained in Secretary to Treasury Keith Muhakanizi’s May 19 letter to the Clerk to Parliament, containing the details of the addendum to the Corrigenda (correction in Budget) schedule to the draft estimates for the Financial Year 2015/16. The initial corrigenda was issued on May 13.

The corrigenda, amounting to Shs5.6 trillion of which Shs486.1b (about 8.7 per cent) is for recurrent expenditure, Shs446.8 billion (8.0 per cent) is for development expenditure and an additional Shs4.6 trillion (about 83.4 per cent) is for statutory expenditures.

Shadow finance minister Geoffrey Ekanya, however, said the record election year Budget confirmed by Finance minister Matia Kasaija and Mr Muhakanizi “is going to cause a debt crisis” as government “struggles” to close the gap. Mr Ekanya said government would have to borrow from domestic sources to plug the gap.

“They are going to take all the money from the pension fund and the commercial banks, he told journalists yesterday at Parliament, adding: “We will have a debt crisis. Inflation will increase to levels beyond those that prevailed in the immediate aftermath of the 2011 general election. We suspect the additional money will be used for electioneering.”

However, Mr Muhakanizi discounted Mr Ekanya’s claim.
“Go and ask the IMF [International Monetary Fund, which monitored the budget process]. Can the IMF tell lies? No,” Mr Muhakanizi told Daily Monitor yesterday.

The corrigenda has increased the Budget by 30.3 per cent. The main contributor to the corrigenda is the statutory expenditures, in particular the Treasury operations at Shs4.6 trillion followed by decentralised pension and gratuity provision, amounting to Shs319.7 billion.
The government revised the election year Budget upwards from Shs18.3 trillion to Shs24.1 trillion, which Mr Kasaija described as “a mere book entry”.
“There is no new money being created; we are simply recognising that government has domestic debt obligations. So we are bringing it to the books of Parliament,” Mr Kasaija told journalists at Parliament yesterday.

Mr Amos Lugoloobi, the chairperson of the House Committee on Budget, said there is a figure of Shs4.7 trillion, which has caused the Budget to “balloon”.

“The Public Finance Management Act, 2015, requires full disclosure about existing and new debts, especially the domestic debt burden,” Mr Lugoloobi said.

He said the increase is also due to the expansion in the Budget for sectors like Works and Energy.

Earlier, during plenary, former Leader of the Opposition in Parliament, also Budadiri West MP, Mr Nandala Mafabi, had brought the matter to the House’s attention.

Parliament is racing against time to approve the Budget, as dictated by the Public Finance Management Act, 2015, by May 31.

May 31 will be a Sunday; so the House has just today, tomorrow and, as the deputy speaker of Parliament, Mr Jacob Oulanyah, suggested, Saturday, to approve the 2015/2016 Budget.

Mr Muhakanizi, in a phone interview yesterday said the increase in the Budget is as a result of adding on old bonds which is equivalent to slightly more than Shs5 trillion.

A bond is debt security issued by a government to support government spending, most often issued in the country’s domestic currency. Government debt is money owed by any level of government and is backed by the full faith of the government.

He said: “This is not fresh money but an old bond that the new law requires be declared and approved by Parliament. So it is not new but a roll over (Reinvesting funds from a mature security into a new issue of the same or a similar security.)”

The money will be invested in infrastructural projects like Karuma Dam, Isimba and other power projects. Responding to whether the budget is for political campaigns, he said: “That I leave to the Auditor General to deal with.”