Finance minister Kasaija in good shape for 2019-2020 Budget

What you need to know:

  • Government move . Government is receiving the benefit of goods and services like the purchase of airplanes, certain infrastructure projects on the basis of non-current promissory notes to avoid busting Budget caps.

Early February, one month to deadline, the Minister of Finance Matia Kasaija presented his Budget statement to Parliament - a rough contour of estimated income and expenditures for the 2019/2020 financial year. The Budget framework provides for key government priorities, infrastructure, national security, education, healthcare and social services. But the statement also highlights the other reality the rising cost of debt interest payments to service domestic, and foreign debts.

The Budget is numbers-wise very conservative - the Budget rose from Shs32 trillion to Shs34 trillion, an increase of just 6.25 per cent. Debt repayment has now jumped to Shs9.5 trillion from just Shs5.1 trillion two years ago or 27 per cent of the Budget. This number lowballs actual debts being incurred today.
Government is receiving the benefit of goods and services like the purchase of airplanes, certain infrastructure projects on the basis of non-current promissory notes to avoid busting Budget caps. A 2019 obligation enters the book in 2021 curiously with approval of Parliament.

As the election approaches, the Ugandan Treasury is likely to be thirstier.
This year, the Electoral Commission published a very small estimate of Shs850 billion to conduct the 2021 General Election. This number will easily burst to Shs2 trillion. Works and Infrastructure consumes Shs5.3 trillion, Education Shs2.6 trillion and Health services Shs2.2 trillion will feel this pinch.

High levels of borrowing presuppose healthy economic growth projected at 6.1 per cent or five times the United Kingdom. After the overdue closure of Crane Bank in 2017, the minister has stabilised the economy halting the cycle of influence peddling, bad debts and inflated securities that were causing contagion in the bigger economy.
Big five banks - Dfcu, Barclays, Standard & Chartered Bank, Stanbic and Centenary Bank - are still struggling with bad debts, but not to the extent of Crane Bank, which was insolvent at the time it was closed and was teetering at illiquidity where it couldn’t service its current obligations. In fact, the minister and BoU need to pay more attention to regulation of the Big five banks.

Stanbic is a versatile national bank operator tying up the heartbeat of the economy from the Ishaka-Bushenyi gold-tea triangle to the northern towns of Moyo, Moroto and the eastern border with Kenya.
In Stanbic, western is a vast region that covers far-flung locations like Kalangala in central Lake Victoria. Centenary Bank has mastered retail, but is still lagging behind in technology and international financial services.
Century old Barclays and Standard & Chartered Bank have struggled with record setting fines levied by European and US regulators, pricey loans gone bad and are retrenching affecting quality of service. They have killed their domestic business overcharging Ugandan customers to offset external losses.

The Finance minister needs prayers and luck to muster better weather. In 2019, dry effects have scorched hundreds of acres jeopardising efforts to replant coffee, cocoa and tea as rainfall totals cannot support projected production levels and are impoverishing farmers who can barely meet their production costs.
Commercial agricultural producers like Oil palm have sought to mitigate rainfall shortage by applying more fertilisers exposing fragile ecosystems like Lake Victoria to more harm. The Minister should start a comprehensive green camouflage to return over-cultivated areas to natural forest through tax credits, a more vibrant tree fund to prepare ground for “Uganda 2050”, which will have more than 80 million people, more than Kenya and Tanzania.

In 2050, rather than 2030, Uganda is likely to attain middle income status a quarter century after first oil in 2025, a boom in agriculture, tourism and mining. A tricameral legislature will take care of the popular vote in the national assembly, big money in the upper chamber and clan-heads, tribal chiefs from Uganda’s 52 tribes in the national council of state.

Mr Ssemogerere is an Attorney-at-Law and an Advocate. [email protected]