Budget: Focus on allocations, not amount – experts

Finance Minister Matia Kasaija arrives at Kololo before reading the budget last year. Mr Mukunda says “there is a higher force, beyond the Ministry of Finance, that influences how money is allocated”. Photo / File 

What you need to know:

  • However, experts say the budget should not just be about the total figure, but the focus should be on how much was allocated where and what the expected outcome will be.

Yesterday, Finance Minister Matia Kasaija read the Shs72.1 trillion budget for 2024/2025 financial year, under the theme: ‘Full Monetisation of Uganda’s Economy through Agriculture, Industrialisation, Digital Transformation, and Market Access.’

However, experts say the budget should not just be about the total figure, but the focus should be on how much was allocated where and what the expected outcome will be.

Dr Fred Muhumuza, a senior economist and the director of the Economic Forum at Makerere University Business School, said the focus should be on who benefits the most from it.

“Sometimes people front the winners and losers, but there are no winners and losers in this budget. The only winners in this budget are people who lent money to the government and they are picking interest and are going to be paid about Shs8.8 trillion. When we look at the budget, we want to know where the flexibility in the budget is,” Dr Muhumuza said.

He expressed concerns about the inflexibility of the budget, stating that a significant portion is already earmarked for debt servicing and statutory expenditure, leaving limited room for discretionary spending, further highlighting the challenge of the government being unable to prioritise its needs within the budget due to its pre-allocated nature.

Citing an example where you have your money in the bank, but opt to move with Shs20,000 in your pocket, starving your needs and interests, he said the government is no longer able to say ‘this is what I want to do and will do it within budget’.

Mr Jane Nalunga, the executive director of SEATINI, expressed hope that certain aspects could change, specifically in reducing excessive borrowing and reallocating funds to drive economic growth in sectors such as agro-industrialisation, tourism, and minerals.

The Policy Officer, at the Eastern and Southern Africa Small-scale Farmers’ Forum (ESAFF) Uganda, Mr Ronald Bagaga, said: “We commend the government’s allocation of funds to support small-scale farmers through initiatives like the revolving fund under the PDM [Parish Development Model].”

“However, insuring agribusiness enterprises and investments in agriculture by small-scale farmers should be deliberate against risks like climate change that threaten the loans, livelihoods, and economic development. The Auditor General’s report 2023 indicated that all enterprises that received the fund were being operated illegally without licences while enterprises weren’t insured,” he added.      

Mr John Walugembe, the executive director of the Federation of Small and Medium Enterprises (FSME), noted that the significant increase in the budget to Shs72.1 trillion is ambitious. He also raised concerns about escalating debt levels and the ambitious target of Shs32 trillion for tax revenue set by the Uganda Revenue Authority, particularly in light of the challenges faced by businesses with the electronic fiscal receipting and invoicing solution (EFRIS).

Mr Prosper Ahabwe, an associate director at Ernest and Young, expressed doubts about the government’s ability to uphold fiscal discipline, particularly given the past supplementary budgets that were introduced.

Additionally, research associate Peninah Naiga from the Uganda Debt Network highlighted concerns about the government’s ability to achieve fiscal discipline, given the ambitious tax revenue target, and the likelihood of resorting to additional borrowing if the target is not met.

Mr Eddie Kwizera, the Member of Parliament of Bukimbiri County, says loan repayment absorbed a significant portion of the Shs72 trillion budget.

“I am concerned about reduced allocations for sectors such as water, electricity, and roads compared to the previous year, indicating potential challenges in meeting public expectations,” he said.